The new finance minister Pranab Mukherjee, who have big plans for the banking sector including effecting further cut in the lending rates and large spending in infrastructure, has convened a meeting of chiefs of the public sector banks on June 10. This will be Mukherjee?s first meeting with the bankers after the UPA form governmentat Centre. Mukherjee, in his meeting, is expected to take stock of the banking issues like rate cut, slow credit off take and capital infusion in to the public sector banks.
Confirming the development, Indian Overseas Bank CMD SA Bhatt said, three things are likely to be discussed during the meet. They include credit offtake, interest rate scenario and finally, the agricultural disbursement.
?While the credit offtake is likely to be good in my bank?s case as I expect it to be at around 20% on year-on-year basis during the current fiscal. After already having taken a call on their interest rates in recent past, it would be difficult for the banks to go for another round of rate-cuts without bringing down their deposit rates,?? he said.
Again, the reduction in the deposit rate depends on the low cost of deposit. Once the cost of deposit was down, the banks will be all set to go for cut in their lending rates. ?As a stable government is in place at the Centre, I think it would help fast revival of the country?s economy which will finally be good for the banking sector as a whole too,?? he said.
S Sridhar, CMD, Central Bank of India said the rate-cut depends on a lot of things like business, performance, profitability of the bank and the cost of deposits. ?So we will take a call on our deposit rates first before thinking for further rate-cuts. Though credit offtake is there, but it was yet to gather momentum. So, I think that we may get some direction on these crucial issues during the meeting,?? said Sridhar..
Allen CA Pareira, CMD, Bank of Maharashtra, said last time when the bakers had met Mukherjee who was the interim finance minister, he had discussed with in details about the action report on the banking sector.
?So, I think the review o the same report may figure during the forthcoming meet. Though rate-cut is not on the agenda, still I do believe that it may come up during the informal interaction with the finance minister on the day,?? he said.
The sectors which need credit include SME, priority and agriculture. Hence the FM may give some advice on how to increase the credit offtake to those sectors. But, for the rate-cuts to happen again, deposit rates have to be brought down first. ?Hence we are likely to discuss the issue when our ALCO meets next,?? he said.
KC Chakrabarty, CMD, Punjab National Bank said though some strains are there during the first quarter, still credit offtake is good across the segments. ?Hence my expectations from the budget are that it must propel growth,?? he said.