Govt's total liabilities rise to Rs 101.3 trn in Q1: Finmin report

Total liabilities of the government increased to Rs 101.3 trillion at end-June 2020 from Rs 94.6 trillion at end-March 2020, according to the latest data on public debt.

The total debt of the government stood at Rs 88.18 trillion at end-June 2019.

Public debt accounted for 91.1 per cent of total outstanding liabilities at end-June 2020, the quarterly report on public debt management released on Friday said.

Nearly 28.6 per cent of the outstanding dated securities had a residual maturity of less than five years, it said, adding the ownership pattern indicates a share of 39.0 per cent for commercial banks and 26.2 per cent for insurance companies at end-June 2020.

During the first quarter of the current fiscal, the central government issued dated securities worth Rs 3,46,000 crore as against Rs 2,21,000 crore in the same period a year ago.

The weighted average maturity (WAM) of new issuances stood at 14.61 years in the quarter as against 16.87 years in the fourth quarter of the last fiscal, according to data collated by Public Debt Management Cell (PDMC).

During April-June 2020, the Central Government raised Rs 80,000 crore through the issuance of Cash Management Bills.

The Reserve Bank conducted one special OMO involving simultaneous purchase and sale of government securities for Rs 10,000 crore each during the quarter ended June 2020.

The net average liquidity absorption by RBI under Liquidity Adjustment Facility (LAF) including Marginal Standing Facility and Special Liquidity Facility was Rs 4,51,045 crore during the quarter.

G-Sec yields have shown a moderating trend in the first quarter of the fiscal with the rate declining to 5.85 per cent compared to the weighted average yield of 6.70 per cent in the previous quarter.

"This reflected the impact of several developments namely a sharp decline in crude oil prices during April 2020, reduction in the repo rate by 40 basis points to 4 per cent by the Monetary Policy Committee on May 22, 2020 and surplus liquidity conditions in the market," it said.

Central government dated securities continued to account for a major share of total trading volumes in the secondary market with a share of 74.0 per cent in total outright trading volumes in value terms during the first quarter of the current fiscal.

The gross fiscal deficit (GFD) of the Central Government for 2020-21 has been budgeted at Rs 7,96,337crore or 3.5 per cent of GDP as compared to the revised estimate of Rs 7,66,846 crore (3.8 per cent of GDP) and the provisional estimate of Rs 9,35,635 crore (4.6 per cent of GDP) for 2019-20.

During April-June 2020, fiscal deficit at Rs 6,62,363 crore worked out to be 83.2 per cent of the budget estimate as compared to 61.4 per cent of the budget estimate in the corresponding quarter of 2019-20.

Public sector banks to turn more profitable: Piyush Goyal after review meet

Public sector banks (PSBs) will become more profitable and proactive in the days to come, Finance Minister Piyush Goyal said after holding a review meeting with the lenders on Monday, days ahead of the interim Budget.
The chiefs of PSBs discussed issues faced in taking bad loan cases to the National Company Law Tribunal (NCLT) along with ways to boost credit, particularly for micro, small and medium enterprises (MSMEs), and improve recovering bad loans.

“The sum and substance of today's meeting is we are going to see a far more vibrant, proactive, profitable banking sector in the days to come,” Goyal said. “We would like them to look at ways to improve delivery of services to farmers. We would like them to be more proactive in encouraging retail businesses.”
Reserve Bank of India (RBI) Governor Shaktikanta Das addressed the chiefs earlier in the day and took stock of the liquidity situation, particularly in non-banking financial companies, said a PSB executive.
Sources said the RBI governor asked banks to make provisions for bad loans. A finance ministry note said Das flagged the need for strengthening various aspects of banking, including underwriting standards, capacity building, using tech, and governance.
Chart “The idea (behind the meeting) was to share with PSB chief executives the regulator's expectations from the banking sector and also to listen to them about their assessment of the state of the banking sector in general and the PSBs in particular and their take on the outlook of PSBs,” Das told reporters.
A PSB chief said the governor was assured there was no liquidity crunch. “The governor told us a line of communication was open between the RBI and banks and all our concerns would be heard. He also told banks to make use of the dispensation given by the RBI on restructuring MSME loans,” a PSB chief executive said.
Earlier this month, the RBI allowed a one-time restructuring scheme for MSMEs with a maximum exposure of Rs 25 crore, to be implemented by banks by March 31, 2020. The MSME account should remain a “standard asset” as of January 1.
The finance minister said discussions centred around support to MSMEs and businesses, along with ways to promote finance for housing and give a thrust to homeowners.
“Bankers expressed confidence that after the government amended the Prevention of Corruption Act while anybody indulging in bad practices will not be spared, (and) genuine commercial decisions by bankers will be protected,” Goyal said. He added the government was “fully backing” every PSB, which would perform better at the earliest.
Punjab National Bank Managing Director (MD) and Chief Executive Officer (CEO) Sunil Mehta said banks were asked whether the process of restructuring MSME loans could be expedited in the current financial year.
“Banks are identifying cases and we are going to provide relief to genuine MSME borrowers in cases where the business model was fine but temporary stress was there,” Mehta said. Mehta said there was an overall review of the Insolvency and Bankruptcy Code framework “and how banks are approaching and resolving the issues. There was a detailed discussion on how we can improve the efficacy of recovery and credit delivery system”, Mehta said.
State Bank of India Chairman Rajnish Kumar said the government was pro-actively addressing issues PSBs raised and the onus was now on bank managements to deliver. He added the RBI governor was receptive of “whatever issues the banks had submitted”.
FinMin on meet
Banks have agreed to step up MSME lending, reduce turnaround time for loan sanctioning, and increase use of advanced data analysis for monitoring
Lenders have committed to enhance efforts for financing under Pradhan
Mantri Awas Yojana, which is aimed at securing ‘Housing for All’ by 2022
Prompt Corrective Action banks advised
to maintain trend of improvement in performance, with a view to bringing them out of the PCA framework at the earliest