Finance Minister Nirmala Sitharaman on Wednesday announced a district-wise credit outreach programme to push bank loan growth from October while stating that it is too early to conclude if there is a lack of demand for credit.

Sitharaman noted that over Rs 4.94 lakh crore was disbursed by banks between October 2019 and March 2021 through outreach initiatives undertaken by them. “This year too sometime in October, there will be a credit outreach in every district of the country,” she said while speaking at a press conference in Mumbai on Wednesday.

A credit push from such outreach efforts will also help the momentum set by the stimulus packages, which have been extended by the government since the onset of the pandemic.

In late 2019, banks had conducted the loan melas’ in 400 districts to push up sagging credit growth. Even now, the credit growth is crawling at around 6%.

“I don't think it is time yet to conclude that there is no credit pick-up. Even without awaiting indications, we have taken steps to ramp up credit,” Sitharaman told reporters.

Sitharaman added that the government had announced that credit up to Rs 1.5 lakh will be given to borrowers through NBFC-MFIs.

“In order to keep up the momentum of stimulus that we are periodically giving, we have also asked banks to go out and give credit,” she said.

Sitharaman, who took a review meeting with the chiefs of all the 12 state-run banks earlier in the day, said bankers had expressed concerns on CASA (current account and savings account) deposits piling up in eastern areas. There is a need to ramp up credit growth in states like Jharkhand, West Bengal, and Odisha.

Banks have also been asked to create state-wise plans for northeastern states to help the logistics sector and exporters.

Sitharaman said banks have been asked to reach out to exporters at the district level to help push Prime Minister Narendra Modi’s ‘one district, one export’ message. Banks have also been asked to look into the demands of the fintech sector, she added.

The government has classified banks and insurance sectors as strategic sectors, Sitharaman emphasized. While pursuing disinvestment and privatisation, the government won’t exit these sectors fully. “Banks, financial institutions and insurance are identified as strategic sectors which means the government’s minimum presence will be there. Minimum presence is something that has to be there as per policy. I will obviously be present in LIC, in the general insurance industry and somewhat in the re-insurance sector also,” said Sitharaman, adding that the government was not averse to the idea of bringing insurance bonds in place of bank guarantees.