The meeting on Friday is slated to be attended by senior officials of the finance ministry, Reserve Bank, Indian Banks Association and all chairman of PSU banks, a ministry official said.
Chidambaram is likely to set farm credit target at Rs 1,41,000 crore (Rs 1410 billion) for 2005-06 after banks over-shot last fiscal's target and disbursed more than Rs 1,15,000 crore loans (Rs 1150 billion) to farmers to ensure 3 per cent growth in agriculture, sources said on Tuesday.
Bankers would be urged to step up credit in other key sectors like infrastructure, manufacturing and export as well to ensure the overall growth in GDP stays above 7 per cent.
The finance minister is also slated to highlight efforts taken by UPA in carrying forward banking reform through a slew of legislations.
In the last 12 months, the government has given more autonomy to PSU banks and encouraged them to tap capital market to raise more resources to sustain their growth in business.
The UPA has also introduced two bills in Lok Sabha to amend the Banking Regulations Act and RBI Act to give more flexibility to the central bank to increase credit flow and improve banks' profitability.
The bills have been referred to the parliamentary standing committee on finance. Indian Banks Association will present an overview of the banking operations during the last fiscal and propose steps to further strengthen PSU banks in the wake of Basle-II norms coming into effect from 2007.
Bankers are likely to request the Finance Minister to make all out efforts to contain inflation, as spiralling prices had led to fall in bond prices and lower profitability of most banks in 2004-05.
The net profit of State Bank of India, for instance, surged by 17 per cent to Rs 4,304 crore (Rs 43.04 billion) during 2004-05 but the consolidated profit of SBI Group has been slightly lower at Rs 5,465 crore (Rs 54.65 billion) than Rs 5,531 crore (Rs 55.31 billion) posted in 2003-04 owing to lower profits of some of its associate banks.
Punjab National Bank's own net profit was up by 27 per cent at Rs 1,410 crore (Rs 14.10 billion) but its primary dealer arm PNB Gilts suffered loss and pulled down the consolidated profits to Rs 1,399.36 crore (RS 13.99 billion) in 2004-05.
Bank of Baroda witnessed a 30 per cent dip in profit at Rs 676 crore (Rs 6.76 billion) while Bank of India net profit was down by 70 per cent at 340 crore (Rs 3.4 billion) and Canara Bank saw 17 per cent decline in profit at Rs 1,110 crore (Rs 11.1 billion).
Union Bank posted a meagre gain in profit at Rs 719 crore (Rs 7.19 billion) while some others like UCO Bank and Dena Bank have shown decline in profit last fiscal due to lower treasury income.
The positive side is that most of the banks have increased their capital adequacy ratios either by way of higher profits or raising fresh capital from the market.
Banks like PNB, Allahabad Bank and Dena Bank have tapped the markets last fiscal while OBC raised fresh capital early this fiscal.
Other banks like Bank of Baroda, Indian Overseas Bank, Syndicate Bank and Indian Bank are in the process of finalising their issues. Banks have also cut their non-performing assets and operating costs while increasing the staff productivity.
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