The Indian Banks? Association (IBA) is of the view that credit growth is likely to moderate to 22% by the end of the fiscal.
Also, IBA doesn?t see any immediate cut in cash reserve ratio (CRR). It also thinks that any further reduction in the repo rate is not likely to result in interest rate reduction by banks. Talking to reporters in Mumbai on Wednesday, IBA chairman and Bank of India CMD, TS Narayanasami, said, ?I don?t see any immediate cut in CRR as there is enough liquidity in the system. So, we shouldn?t aggravate the system by infusing further liquidity as short-term liquidity into the system was abundant. Secondly, the repo rate cut now will not bring down interest rates for a simple reason that the short term liquidity was abundantly available in the system, said Narayanasami.
He hoped that cost of funds of banks may come down by 100 basis points, if the present trend of rate-cut continues.?
He said that credit was flowing into the real estate and agri sectors now. Still big-ticket companies were not moving.
Talking about his bank, Narayanasami said that the liquidity available with his bank as on date was to the tune of Rs 7,000-8,000 crore.
?Today, all sectors are affected by external factors as their valuation have come down,? he said.
On financing infrastructure projects, Narayanasami said ?We are not slow on long term financing as a sum of Rs 2,50,000 crore has been disbursed to the infrastructure sector alone within past couple of years.?