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Finance ministry holds meeting with PSBs sans Nirmala Sitharaman to review NPA situation

NEW DELHI: The Union Finance Ministry on Thursday held a meeting with representatives of Public
Sector Banks (PSB) to discuss the issue of bad loans, or Non-Performing Assets (NPA), as well as the future roadmap for the banks.

“The heads of PSBs met the secretary of the Department of Financial Services. The overall NPA situation as well as the extension of the moratorium period was discussed,” said a finance ministry official.

Among other issues that came up included the management shift of merged entities. Finance Minister Nirmala Sitharaman could not attend the meeting as she was scheduled for another meeting with the Prime Minister as well as a plenary meeting of the International Monetary and Financial Committee of the IMF.

With economic growth set to slow down, the International Monetary Fund has cut India’s GDP growth estimate to 1.9 per cent for FY 2020-21, and said the banking and financial sectors, whose prospects are tied closely to the economy, is bound to bear the brunt.

Experts fear there could be a spike in bad loans. The slowdown could lead to potential job losses, which could cause stress in banks’ retail loan books. “With discretionary consumption likely to get affected, loan growth could slow down across segments,” said Nitin Aggarwal, vice-president, research-banking sector, Motilal Oswal Institutional Equities.

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