'A slowdown in credit in real estate and consumer loans'

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: Currently, the country’s banking industry operations are being restructured thanks to the tightening of monetary policy for controlling inflation. MD Mallya, chairman & managing director, Bank of Baroda, in an exclusive interview with FE’s Kumud Das, explains how the industry is readjusting itself to the situation and meet the challenges. Excerpts:

Don’t you think that as the RBI uses the monetary policy to curb inflation, it hampers banking industry growth and consequently the ability of corporates to raise resources?

The monetary measures have been aimed at controlling the inflation. I wouldn’t say that bankers have been hit especially on account of that. Obviously, there is going to be some moderation as far as the credit growth is concerned. But, let me make one point very clear that despite these conditions could meet the genuine credit requirements of the productive sectors of the economy. If at all, there has been a slowdown in credit, it has been felt in certain segments like real estate, consumer and in the personal loans area.

As far as lending to agriculture, small-scale industries, small and medium enterprises, or even infrastructure and corporate lending is concerned, I don’t think that there has been any slowdown in bank credit disbursements.

The expectation is that in the current year the credit growth in the banking system would be in the range of around 20%, and I think going in the context of present scenario we must be able to achieve it. We haven’t seen any decline as far as draw down in respect of projects that are already under implementation.

All the major projects that are under implementation, like power or roads, the availability of credit, the draw down of sanction limit has continued as per the earlier estimates and we haven’t really seen any slowdown in all these infrastructure-related projects, which are actually the lifeline of a country’s economy. In fact, the infrastructure sector of the country has witnessed nice growth. But then obviously, areas like real estate have been showing a decline.

How long do you think the situation will continue?

The impact of the various monetary measures will be felt as we move along. Keeping in mind a GDP growth target of around 7.5-8%, I think that the Indian economy is likely to perform well.