Reserve Bank of India is likely to accept bankers demand to extend the deadline for restructuring of some recessionary hit accounts KC Chakrabarty, deputy governor, Reserve Bank of India has said ?We may give some relaxation in the deadline for the same to banks on case-to-case basis. But it will be applicable only for those accounts that came up for restructuring after March 31, 2009.??
Chakrabarty who was addressing the 20th Skoch Summit 2009 here said that a time when the country is facing the worst crisis ever globally, then these kinds of problem are not uncommon.
?Banks are trying to do it through mechanisms like CDR (corporate debt restructuring). We have allowed banks to restructure those accounts that came for the purpose before them until March 31, 2009. Also, we have asked the banks to complete the restructuring of those accounts by June 30, 2009.??
On interest rates he said RBI?s stance is that rates should remain stable and benign. ?We are trying to keep interest rate benign. Secondly, interest rate is a function of inflation. Because inflation is at ease, maintaining benign interest rate is not difficult.??
There is some pressure on the interest rate, but it can be managed by not raising the interest rate much higher, he said.
?Take the example of the last fiscal, when the government borrowing was more than budgeted. Still, the interest rates didn?t go up in that proportion during the year,?? he said.
On credit growth the Reserve Bank of India deputy governor said the credit growth remained slack in the first quarter of the current financial year, despite its having picked up for the past two fortnights.
?I do believe that credit offtake will pick up during the second half of the current fiscal. That is why we are going for the maximum part of the government borrowings during the first half of the year itself,?? he explained.
But the problem is that even though there are demands for credits, the banks are unable to mobilise the funds for the same. They may have to pay higher rate of interest for deposits, he said.
On financial inclusion he said ?We want to make rural banking as a legitimate and viable business activity for banks. Globally, it has been recognised that rural poor are bankable. We want that 50% of the excluded to be covered by banking by 2012. There is no punitive action to be taken against banks for their not being able to achieve the financial inclusion targets,?? he added.
But, not achieving the rural target comes as a cost to the banks as they have to resort to measures like RIDF.
?Cost of financial inclusion programme will remain higher in case we have to resort to business correspondent model. The present business correspondent model is too restrictive. Hence RBI is examining it to make it more operative. The RBI plans to issue new set of guidelines for business correspondent model in a month time,?? he revealed.