Economic growth likely to be 5.5% in Q2: Chidambaram

The Indian economy continues to grow slower than the growth projections of the Reserve Bank of India and the government. The Indian economy grew by just 5.5 percent in the second quarter, same as it did in the first quarter. Banks need to hand hold companies to revive the economy. While RBI projected a growth of 6.5 per cent and the government projected a growth of 7.5 per cent the economy continues to show a flat growth.

Finance Minister P Chidambaram while speaking at the banking conference organised by the Bank of Maharashtra in Pune said, “the growth of the Indian economy in the second quarter is likely to be at 5.5 per cent but we need to aspire to grow at the rate of 8 per cent. Banks need to collaborate with the government in reviving the fortunes of the economy. I intend to meet with the bankers to urge them to lead the path for reviving the growth in the economy.”

“I expect the reform bills on FDI in retail and the other bills to go through in parliament with the co-operation with all the stakeholders.

Consolidation in the banking sector is inevitable as India grows in size. “Some consolidation is inevitable as consolidation takes place at the top there will be space lower down for banks to display their regional flavour.

The Reserve Bank of India (RBI) said that the new Banking licenses should be issued by the Reserve Bank of India so that more new banks will be in operation. The powers that the RBI is seeking to supersede the banks are already in place, by the time the guidelines are issued and the new applicants are there the banking regulation act can also be amended.”

“Instead of banks being clones of each other, every bank should have their own approach to growth rather than have uniform approach. I find that even the Regional rural banks that are sponsored are clones of the parent banks. I don’t like the uniform approach,” Chidambaram added.

Banks should not refuse credit to any customers. Farmers, students and SHGs are all good customers. Even as I speak today there are about Rs 54,000 crore of student loans that banks have extended.

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