Pranab wants banks to help achieve over 9% economic growth

The banking sector in the country should be attuned to the credit needs of the economy and support a growth momentum of 9 per cent or more, finance minister Pranab Mukherjee said today.

The Indian economy is currently on a growth trajectory that is expected to hit 9 per cent or more in the coming years, Mukherjee said at a function organised by Union Bank in the national capital.

The finance minister, however, cautioned banks of the challenges ahead, especially the deterioration in asset quality and decline in profits.

Though banks in India emerged unscathed from the global financial crisis and are still in relatively good health, challenges still remain, he said.

"There was a decline in the profitability of Indian banks in 2009-10 in terms of all the major indicators. Furthermore, the asset quality of banks deteriorated and the coverage ratio of provisions showed a fall at the aggregate level reflecting a weakening cushion to meet NPA losses."

Banks need to give due attention to the asset quality and prudent provisioning to balance emerging returns and risks while supporting the growth momentum in the economy, he said.