New
Delhi: Finance minister P Chidambaram today asked public sector bank chiefs
to take steps to moderate credit growth to high risk sectors like commercial real
estate and capital markets, while making credit available at "correct prices"
to productive sectors. At
a meeting with bank chief executives Chidambaram also asked them to open new branches
in the 103 minority dominated districts. Later
addressing the media, Chidambaram said that the government had advised banks that
credit growth of about 30 per cent has to be moderated therefore they had to rebalance
their portfolio and moderate credit growth to what RBI calls high-risk sectors
like commercial real estate, capital markets and systemically important NBFCs.
"We
have impressed upon them that they have to rebalance their portfolio so that adequate
credit at correct prices is made available to productive sectors," he said
adding that bank chairmen had said that they had already started rebalancing their
portfolios in the second half of 2006-07 and would proceed with it this year,
too. "Banks
have been advised that while keeping their long term portfolio (in mind), they
should protect the interests of home loan borrowers taking loans of Rs 8-10 lakh,
to the extent possible," secretary (financial sector) Vinod Rai told reporters
after Chidambaram''s meeting with PSU bankers. The
finance minister said that banks have been cautioned against raising bulk deposits
at high cost in the months of February and March, terming this kind of a trend
a "vicious circle". He
said if banks had raised bulk deposits at high costs in February and March this
year, they would do it again in February and March the next year. The Indian Banks
Association will now evolve guidelines on raising bulk deposits at high cost.
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