This was announced in the first ever, interaction of IBA as an association over the credit policy. The focus of the sub-group will be on transparency and these rates will also be made available to the public at large. Banks will arrive at the PLR after taking into account their cost structure, overheads and margins.
IBA chairman, V Leeladhar sought to explain that the IBA was always agreeable to the concept of Benchmark PLR. It was only on the operational part of it that the bankers had a reservation since banks offer a host of products and services and arrive at a common PLR for all of these.
As for the credit policy the IBA felt that the policy was positive and a forward looking one with a large number of feel good factors. The IBA chairman, Mr Leeladhar pointed out to the upward revision in the GDP growth rate, low inflation rates and orderly forex markets. However, when quizzed whether the central bank action of keeping the key rates unchanged could be considered as a switch to a neutral policy, Mr Leeladhar felt that the RBI was continuing with its policy stance.
Mr Leeladhar said that credit- offtake remained an area of concern for the bankers. He pointed out that SMEs, Agriculture and Infrastructure clearly were the areas where a lot more could be done and expressed hope that the two advisory committees i.e one on Agricultural commodities and the working group on SSIs will help smoothen out problems for bankers.
Importantly, Mr Leeladhar said that agricultural credit now has become commercially viable provided credit delivery is taken care of. Though, banks still remain a bit apprehensive over wafer thin margins of SSIs and their adaptability in the post-WTO scenario.