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Rising bad loans: Jaitley to meet banks & FIs’ honchos on Tuesday

Amidst concerns over rising bad loans, Finance Minister Arun Jaitley will hold pre-budget consultations with heads of banks and financial institutions on 10 June to deal with the situation.Meeting with CMDs and CEOs of banking and financial institutions is scheduled for Tuesday, a day after the Finance Minister pre-budget consultation with state finance ministers, sources said.

To be presented in the first week of July, it will be the maiden Budget of Jaitley. It will also be the first major policy document of the Narendra Modi government and will spell out the direction for the economy.Banks and insurance companies are likely to seek tax benefit for their products in the budget.

Bankers are likely to pitch for the need to support infrastructure funding and make demand for issue of tax free bonds for this sector.
Intermediaries in the financial sector would suggest for rationalisation of transaction charges in the secondary market.
Jaitley kick started pre-budget consultations with different interest groups
last week.He faces several challenges on the economic front, like rising prices, subdued growth and the need to move ahead on the path of fiscal consolidation.

Among other things, he will also have to focus on streamlining subsidies which consume a major potion of government expenditure.
Soon after assuming office, Jaitley had said he was taking over in challenging times. ‘The challenges are very obvious. We have to restore the pace of growth, contain inflation and obviously concentrate on fiscal consolidation,’
Jaitley had said.

In his Saturday meeting with financial sector regulators, including RBI governor Raghuram Rajan and Sebi chief U K Sinha, Jaitley took stock of the prevailing economic condition.Irda Chairman TS Vijayan, Forward Markets Commission Head Ramesh Abhishek and PFRDA’s Officiating Chairman R V Verma, besides senior finance ministry officials including finance secretary Arvind Mayaram, secretary department of financial services G S Sandu, among others were also present.

He emphasised on the need to improve business climate and reduce the cost of doing business as important means for revival of the investment cycle. India’s economic growth stayed below 5 per cent for the second year in a row at 4.7 per cent in 2013-14, mainly due to a decline in manufacturing and mining output. Growth remained subdued at 4.6 per cent in the fourth quarter of last year. Reaffirming the government’s commitment to keep finances in check, the Finance Minister said he is against ‘slackening the vigil in the area of fiscal consolidation’.

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