Another Rs. 130k crore to be lent by banks to meet the 16% target of RBI
By Neelima Shankar
Mar 11, 2010
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Credit growth has taken a peak in the last few weeks. But banks still need to lend another Rs.1,30,000 crore in order to meet the projection of 16% credit growth set by RBI for the year 2009-10.

This means that credit in March has to be more than double the amount lent by banks in February 2010. The banks have lent Rs. 60,000 crore in February.

As more and more lenders are demanding loans to meet their targets, the banks are experiencing a gush in credit flow  and they expect to achieve target of 16% credit growth set by the Central Bank. In March 2009, the banks had lent around Rs.1, 00,000 crore. March 2006 had seen a credit growth by as much as Rs. 1, 40,000 crore.

As per the data released by RBI, the credit flow from banks during the twelve months ended on 26th February this year has grown by 13.81 %.

Outstanding bank loans as on February 26, 2010 showed a figure of Rs 308, 9322.9 crore. Rise in both food and nonfood credit was visible by Rs 3,364 crore and Rs 34,282 crore, respectively. This means that banks have to lend around Rs 130,314 crore in March 10.

On the other hand, Chairperson of SBI, Mr. O.P.Bhatt said that credit growth of the bank has not been up to the mark. However, he said that the home loan book is showing an upward growth trend. Public sector banks are expected to meet the target more convincingly than the private counterparts.

Foreign banks are seeing a decline in their loan books.

HSBC chief economist Robert Prior Wandesforde, has said that credit growth will pick up pace in FY11 as there will be a considerable increase in capacity expansion, which would require investors in projects to rely more on bank funds.

One of the indicators of a strong need to add capacities is the strong growth in the industrial output, he said.


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