State-owned banks may be asked to ensure 20-% loan growth

Public sector banks may be asked by finance minister Pranab Mukherjeeto ensure a loan growth of 20 per cent to help the economy to grow at between 8 per cent and 9 per cent say commentators.

Mukherjee is to meet the chief executive officers of state-owned banks on Saturday in New Delhi to review the annual performance of their banks as per practice.

Banks have to finalise targets on various financial parameters to the finance ministry, popularly known as a statement of intent (SOI).

The performance of the banks is reviewed at the year end and bank chiefs who have achieved all stated targets, receive full bonus while others receive a bonus linked to the targets achieved.

According to analysts, bankers would likely ask for being included in the list of entities eligible for raising long-term tax-free bonds. Some select entities including LIC and IDFC have been approved to raise tax-free long term bonds, the proceeds of which would be used for building roads, ports and airports.

Last fiscal, a number of banks had fallen short of their credit and deposit targets and this issue is expected to be broached in the meeting, they add.