Addressing a press conference after her meeting with officials of the private sector banks and public institutions on Thursday, Union Finance Minister Nirmala Sitharaman asserted that she had not got any feedback about the possibility of a liquidity crisis. She further added that only wholesale financing was affected to a certain extent. Sitharaman also revealed that the small finance banks seemed to be on a smooth path. According to her, there was positive growth in the rural areas where the demand for loans was higher.
The Finance Minister contended that she received favourable feedback about the affordable housing scheme launched by the government. She opined that the drop in commercial vehicle sales was viewed as a "cyclical problem".
"So, largely one of the opinion that prevailed is that the affordable housing scheme which the government has launched, has really taken off well. The commercial vehicle related problem is seen as a cyclical problem. It is seen as a problem which is not new. It happened sometime in 2010 or so. So, the private bankers and the NBFCs which are specializing in lending for commercial vehicles feel that it is a problem which will be gotten over in the next 1 or 2 quarters. In the passenger vehicle segment, it is largely driven by sentiment. If there was a problem in the liquidity, it was in wholesale financing and not in the retail," Sitharaman observed.
In the last few weeks, the Centre has rolled out various measures to boost the economy in the pursuit of the $5 trillion economy target. Initially, reforms like the promise to initiate the scrappage policy, lifting the ban on government departments to purchase new vehicles, extending the operational period of BS-IV vehicles, cheaper loans and a centralized system for Income Tax notices were introduced. This was followed by the easing of Foreign Direct Investment (FDI) norms in coal mining, contract manufacturing, single-brand retail and digital media. Thereafter, the Finance Minister announced the merger of major Public Sector Banks and governance reforms for banks. Subsequently, the export, housing and real estate sector also benefited from the Centre's measures. The latest development came in the form of the government slashing the corporate tax rate to 25.17% inclusive of all cess and surcharges for domestic firms.