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Bankers see pressures on rates in select sectors

By Staff
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Mumbai, Apr 18 (UNI) Leading bankers today said that the Reserve Bank of India (RBI) annual policy statement is progressive with a cautious approach in expanding credit exposure to certain sectors such as real estate, large home loan portfolio and capital markets.

Responding to various measures prescribed in the policy, they said, there was a need for banks to augment additonal resources in light of growing credit demand, which may compell certain banks to realign their credit and deposit portfolios through adjustment of interest rates.

''Certainly, banks need to adust their portfolio in light of increase in provisioning norms in some sectors'', saidbank of India, CMD V Balachandran.

He said that sectors with high risks could see certain hardening of lending rates in the coming months as the banks need to offer better interest rates to the depositors.

Bank of India will hold it assets liability committee(ALCO) meeting next week to review the situation and take a decision on the interest rates. ''Right now, I can not say divulge any measure to be discussed,'' he said.

Central Bank of India CMD H A Daruwalla said that the policy highlighted the overhang liquidity position in the system that needs to be address through adjustment of rates, keeping inflationary expectations.

Though, she did not spell out the banks' terms of revision of interest rates, she, however, hinted that the lending rates for large housing porfolio, commercial real estate and capital market could be revised after the meet of the ALCO.

CMD Bank of Baroda, Dr A K Khandelwal said that the RBI Governor in his address, sensetised the bankers on excessive exposures of credit in certain segments of the economy as the overall credit in the banking sector grew over 30 per cent in last one year.

Dr Khandelwal also said that the revision of lending rates by banks would largely depend on the portfolio exposure of each bank as against the cost of funds.

In its annual policy, RBI raised by one per cent the provisioning for standard advances for personal loans, capital market exposures, residential housing beyond Rs 20 lakh and commercial real estate loans.

The Central Bank however, left the Bank rate and Repo rate unchanged.

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