The Hindu : Front Page : ‘Turnaround in economy by October’

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‘Turnaround in economy by October’

Special Correspondent

Chidambaram inaugurates the 2,501st branch of Union Bank

—PHOTO: K. RAMESH BABU

OPTIMISTIC STAND: Union Home Minister P. Chidambaram and M.V. Nair (left), CMD of Union Bank, at the inauguration of the bank’s 2,501st branch in Hyderabad on Saturday.

HYDERABAD: Union Home Minister P. Chidambaram has forecast that 2009-10 financial year will be a difficult one, given the economic slowdown. The turnaround should happen in October, he said.

“With right leadership and policy, we will steer through difficult times as India has several factors going in its favour -- demographic advantage and high degree of confidence in its economy. The 21st century is going to be Asia’s and India’s,” Mr. Chidambaram said on Saturday after inaugurating the 2,501st branch of Union Bank at Banjara Hills.

Equity

The Union Minister said the government would not dilute its equity in the public sector banks below 51 per cent.

The previous NDA government planned to dilute the stake to 33 per cent, but it did not materialise as it went out of office after the elections. He said this in the context of the growth story of Union Bank, one of the oldest public sector banks.

Robust health

Its business turnover of Rs.1 lakh crore in 2005 crossed Rs. 2 lakh crore by September, 2008, Mr. Chidambaram pointed out. While banks all over the world were collapsing, Indian banks had emerged stronger. He attributed the robust health of PSU banks to the UPA government’s policy of owning 51 per cent or more of equity.

The last five years had vindicated the UPA’s policy and the same would continue in the next five years, he said. Even during slowdown, the Indian economy had done well to deliver nearly 9 per cent growth.

“Our growth even in this year will be 7.1 per cent. We tamed inflation which was a monster seven months ago,” he said.

Mr. Chidambaram emphasised that banks should stand by its customers during difficult times by making loans affordable, providing more capital, rescheduling loans and modifying interest rates. “Healthy liquidity of banks should translate into credit delivery.”

Bottom of pyramid

As banks were nudged to cater to the bottom of pyramid by extending loans to SHGs, minorities, poor, students, micro, small and medium enterprises, they found new opportunities of growth, he said.

Union Bank Chairman and Managing Director M.V. Nair said 500 more branches would be opened in the next six months, including 41 in the State taking the total number in the State to 200.

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