On Monday, top leaders of India Inc asked for decisive action to revive growth. On Tuesday, this chorus was taken up by the financial sector. Top officials from the banking, insurance and mutual fund industries appealed to the Government to take policy action to revive economic growth.
The call came after they separately met the two men at the helm of economic policy making in the country – the Chairman of the Prime Minister’s Economic Advisory Council Chairman, Dr C. Rangarajan, and the Deputy Chairman of the Planning Commission, Mr Montek Singh Ahluwalia.
The meeting was attended by Mr Alok Mishra (Chairman, Indian Bank Association), Mr S. Raman (CMD, Canara Bank), Mr K. R. Kamath (CMD, Punjab National Bank) and Ms Chanda Kochhar (CEO, ICICI Bank).
Mr Milind Barve (Chairman of AMFI) and others represented the mutual fund industry. Top officials of public and private insurance companies were present.
Talking about meeting with Dr Rangarajan, a highly-placed source said: “The banking industry raised sectoral issues, while mutual funds talked about slower economic growth which is affecting inflows. At the same time, the insurance sector alleged that various regulatory changes, though in right spirit, took place too fast and affected growth.”
Bankers said high interest rates were not as big an issue as regulatory and other problems dogging various sectors such as telecom and power. For example availability of coal is affecting power sector projects, leading to non performing assets (NPA) and slowing down the rate of credit growth. Bankers sought more action on the policy front for these sectors, the source added.
The mutual fund sector is said to have highlighted the hardships because of overall slowdown in growth. The industry said it was against reintroducing an ‘entry load.’
The meeting got a sense that the insurance sector was in deeper trouble, with business shrinking for two successive years. Accumulated losses reached nearly $4-5 billion.
The sector was peeved with the regulatory changes which impacted Unit Linked Insurance Policy (ULIP) sales. Reduction in commission along with other policy changes have also brought down premium collections, they said.
The source said that though such a consultation was routine before the PMEAC prepares its semi annual report on the Economy, it assumed significance in the absence of a regular finance minister.