NEWS & ADVICE : CAR LOANS
Banks: Credit growth of 24% might not be difficult to achieve
By Vaibhav Aggarwal
Jan 30, 2009
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In the latest policy review, the credit growth has been projected upwards from 20% to 24% by the Reserve Bank of India (RBI) and the bankers look positive in achieving this growth rate.

Senior bank officials in the industry feel that even though the RBI has given a revised projection of credit growth at 24%, it might not be difficult to achieve this rate.

Commenting on the revised projected credit growth rate, RBI Governor Dr D. Subbarao said, "These numbers are provided as indicative projections and not as targets. However, during tough times it is important that credit must keep flowing, particularly to the productive sectors."

Presently also the credit growth is higher than the RBI's earlier projected rate of 20% for 2008-09. Bankers say that the credit growth has been improving due to the rising demand and busy season in the market.

Allahabad Bank's Chairman and Managing Director, Mr K.R. Kamath said, "On a year-on-year basis, the credit growth in the banking industry has been close to 20-22 per cent. The next two months are the busy season and it will not be difficult for banks to grow its credit book by about 24 percent."

At the same time Executive Director of UCO Bank, Mr V.K. Dhingra also attributed the growth of credit to the substantial demand in the market. "There was some slowdown in demand during the last few months; we had also curtailed lending due to concerns regarding asset quality. However, now things are improving and we foresee credit growth picking up," he said.

Meanwhile bank officials pointed that the interest rates in the industry are set to come down on account of both deposits and loans but there is also an increased pressure on NPAs (non-performing assets). "Asset quality is a huge challenge, we should ensure that we do not get hit by rising NPAs," said Mr S.C. Gupta, Chairman and Managing Director, United Bank of India.

Moreover RBI has also upped the money supply target from16.5%-17% to 19% in its quarterly review of the monetary policy. Also acknowledging to the slowdown, GDP target has been reduced down to 7% from the earlier target between 7.5% and 8%.


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