UNION Finance Minister Nirmala Sitharaman said Tuesday that the government is working on some sops for the real estate sector, particularly for home buyers, and support to senior citizens in the wake of the decline in interest rates.
“In real estate, we have started working on some proposals… we will have an offer for home buyers. Soon we will come to a stage to offer some solutions to them,” she said. The government is also working on “support to the senior citizens… work is going on it”.
Moreover, in what is the first major reform being proposed in the aftermath of the Punjab and Maharashtra Cooperative (PMC) Bank crisis, Sitharaman also hinted that cooperative banks in the country will soon face tighter regulation norms, and will be brought under the ambit of the Banking Regulation Act, 1949.
Sitharaman was speaking with The Indian Express Executive Editor (National Affairs) P Vaidyanathan Iyer and National Opinion Editor Vandita Mishra at Express Adda, an informal interaction organised by The Indian Express group.
The growth in the home loan segment has declined in the last quarter and senior citizens have seen a decline in their income from bank deposits due to the falling interest rates.
On the collapse of IL&FS and Jet Airways, she said, “I don’t want any more institution falling off the cliff.” She added: “Why we didn’t sense it earlier… it was much too late.”
Claiming that recapitalisation of public sector banks would also see more money flow into non-banking financial companies (NBFCs), she ruled out asset quality review in the sector as of now. “We’re giving them support,” she said.
Sitharaman also hinted at a greater say for the corporate sector in the banking industry. “We would love corporates to have a greater say in bank management and are open to more banks coming up in the corporate sector,” she said.
The Reserve Bank of India’s (RBI) move to impose curbs on lending and withdrawals of the crisis-laden PMC Bank reportedly due to under-reporting of bad loans had earlier turned the spotlight on the regulation of cooperative banks, which are jointly regulated by the RBI and the state government. To protect the interest of depositors, an RBI panel under former Deputy Governor R Gandhi had earlier suggested an amendment of the Act to grant the regulator more powers over cooperative banks.
“We will bring amendments to ensure that once you are calling yourself a bank, you come under the Banking Regulation Act,” said Sitharaman.
“I have had three meetings with the RBI and the industry (on this topic). The question is how are we communicating to the investor that their monies are safe and also to look at whether the cooperative banks get governed as adequately as a bank,” she said.
Sitharaman also called India’s move to not join the Regional Comprehensive Economic Partnership (RCEP), a 16-nation trade agreement, on Monday as a “realistic and practical decision.” “Many of our core concerns were not addressed both in the goods and the services sector. We cannot conclude an agreement just because we would be seen as an outlier. We still have a long way to go before our exporters derive maximum benefits from such agreements,” she said.
“We would love to continue and have our concerns addressed. I am satisfied that the partner countries said they will address our concerns. We’re not shutting our doors or looking inwards. We are actively engaging with the global trading community,” she said.
The Finance Minister also stated that the government’s focus in the coming months would be towards reducing input costs to improve the ease of doing business in the corporate sector and enable companies to invest and expand more.
Signalling more economic reforms in the near future, she said, “In our country, the difficulty in taking call is in moving forward with reform-based actions. We may have missed the bus the last time but we won’t miss the bus now.” She said that she wouldn’t grudge if the companies are using gains from the corporate tax reduction to deleverage their financials.
When asked if the dwindling state of economy played a role in BJP’s performance in Haryana and Maharashtra, Sitharaman said: “It’s not possible for whichever government, in Centre or state, to not talk about the economy at all and ask for votes. The economy is a matter, but voter sees there is a genuine attempt to build economy.” The economy is an issue during every election, she said.
“The government is also looking at electric vehicles and strengthening and encouraging public transportation,” she said. The Finance Minister also spoke about deepening the bond market and increasing retail participation.