Govt asks PSBs to make overdraft facility for Jan Dhan a/cs attractive

Govt asks PSBs to make overdraft facility for Jan Dhan a/cs attractive
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New Delhi, Jan 29: The government asked staterun lenders to make overdraft facility and accident insurance for Jan Dhan accounts more attractive, even as banks promised to step up lending under the Prime Minister Awas Yojana and to small businesses.
The government’s thrust on some of the segments such as Jan Dhan and MSMEs is seen to be part of a series of sops for voters in the run up to the general elections.
Banks are currently allowed to offer Rs 5,000 overdraft under the Pradhan Mantri Jan Dhan Yojana if certain basic criteria are met. Many fear that the facility will result in a pile-up of bad debt, something that the government has denied.
We would like them to look at ways to improve delivery of services to our farmers. We would like them to be more proactive in encouraging retail businesses. We are going to see a far more vibrant, a far more proactive and a far more profitable banking sector in the days to come,” said Piyush Goyal, who is officiating as finance minister.
At the meeting with bank chiefs, Reserve Bank of India governor Shaktikanta Das too exhorted banks to shed “excessive conservatism”, while extending loans within the existing prudential norms. The statement from the regulator is seen to be significant given that his predecessor Urjit Patel had adopted a tough stance on bank lending.
This had resulted in a sharp slowdown in credit flow, which the government said is showing signs of improvement.
Goyal said that the bankers discussed various ways in which the operations of the banks can become more efficient, customer friendly and profitable, besides ensuring that the stated goals of this government are directed towards reaching financial inclusion of every Indian anywhere in the country. Banks are also expected to now announce steps in the next few days to make overdraft facility and accident insurance for Jan Dhan accounts more attractive.
While observing that the Insolvency and Bankruptcy Code (IBC) has helped public sector banks (PSBs) recover over Rs 1 lakh crore in the three quarters of the current fiscal, the minister exuded confidence that it would make them more profitable in the days ahead.
“We have discussed how working of IBC has helped them recover large amount of money both through the IBC mechanism and NCLT (National Company Law Tribunal), and in many cases without having to go to NCLT through the pressure that is built up on the large borrowers,” he told reporters.
Goyal further said the meeting also discussed internal mechanism to resolve cases under the RBI guidelines and within the framework set in the bankruptcy court and see how there can be a faster resolution so that businesses can turn around and so can the banks.
Assuring full support to public sector players, the minister said bankers have also got confidence from the amendment in the Prevention of Corruption Act that bona fide actions are protected by the law.