In a coordinated effort both the Centre and Reserve Bank of India announced stimulus package for the banks to facilitate larger credit off take in the country. While the RBI announced measures to slash key rates?repo, reverse(by 1%) repo (1%)and cash reserve ratio (0.5%)?the Centre said it would provide Rs 2 lakh crore of recapitalisation to the state- owned banks to help them expand their business.
Even as some public sector and private sector banks have cut lending rates in response to the RBI?s monetary policy stance, concerns over rising credit risk together with the slowing of economic activity appear to have moderated credit growth, said RBI.
The RBI would continues to urge banks to monitor their loan portfolio and take early action, including debt restructuring where warranted, to prevent the rise of bad assets down the road and safeguard the gains of the last several years in improving asset quality, said the central bank..
OP Bhat, chairman, State Bank of India said the credit offtake, which normally picks up during the second half of every fiscal year, but couldn?t happen during past quarter more due to the reason that the builders were adamant to cut the prices of their properties.
However, Bhat hoped with the announcement of new stimulus package, the credit offtake may see a spurt from the middle of the month,particularly after Makar Sankranti. ?The worst period that had resulted by the temporary slowdown, is over now, said Bhat. KC Chakrabarty, chairman & managing director, Punjab National Bank said due to these monetary measures we are confident of growing our credit-off take at around 35% in the next fiscal. Chanda Kochhar, joint managing director, ICICI Bank said ?The reduction in CRR and repo and reverse repo rates is a welcome measure, which reflects confidence in the declining trend of inflation. These measures would accelerate the move to a lower interest rate regime across the system. This should lead in greater credit availability and demand, and spur consumption and investment.
MD Mallya ,CMD, Bank of Baroda said the measures are surely going to boost the credit growth of the Indian banking system. MV Nair, CMD, Union Bank of India, ?Our credit off-take is expected to grow over 25% in the next financial year.?
Allen CA Pereira, CMD , Bank of Maharashtra said, ?We are confident of growing our credit portfolio by over 20% in the next fiscal. In inspite of these monetary measures, if credit demand does not abosrb the adequate liquidity present in the system currently, the regulator may have to intervene in future and take requisite steps to curb an over liquidity scenario.?