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India goes big on lending activity

In a bid to inject liquidity into the economy, Indian government has redoubled efforts to push state-run banks to boost lending. It has also told lenders to submit a daily report detailing the volume and scale of loans sanctioned.
The move comes amidst a recent 75 basis point rate cut by the Reserve Bank of India (RBI) to revive flagging growth.

However, senior banking sector executives pointed out that lenders remain reluctant to open the tap amid fears of higher default rates with businesses and jobs at risk as the country’s banking system is already reeling under nearly US$ 140 billion in bad debt.

Some bankers said that after the finance ministry, in a letter dated April 17, asked banks to furnish detailed data on new loans, certain state-run banks had started giving branch-wise targets to ensure lending was taking place and branch managers were being asked for clarification if targets were not met. Sources clarified, however, that the government has not given lenders any targets.