The bankers after reducing the deposit rates are now keeping watch on lending rates which may come under pressure as the credit offtake has shown signs of faster expansion.
Union Bank chairman & managing director, MV Nair has said, ?We are keeping a watch over the lending rate and would be able to take call whether to hike or not in next few weeks.?
According to Nair, there may be larger demands for the funds by the India Inc after the Reserve Bank of India (RBI) has put in restrictions on the raising and using of external commercial borrowings (ECB). The RBI’s move to raise cash reserve ratio by 50 basis points in first quarter review of monetary policy thereby sucking out Rs 15,000 crore is also expected to pressurise he liquidity in th system. ?Things will be more clear after few days,? he said.
Senior officials of the bank said gilts markets have appreciated and bond market has seen trading volume falling to Rs 1000 crore from an average of Rs 6,000 -7,000 crore after the RBI move.
The bank which has recorded an oerall credit expansion of 15% thus far is targetting 25% growth in credit offtake during the year. The bank is now emphasising the growth of business through financial inclusion in both urban and rural areas.