The Hindu Business Line : `Credit pick-up offsets rate hike impact on banks'

A STRONG pick up in the credit off-take due to buoyant demand in the economy and revival of industrial activity have driven banks' core interest income significantly higher, said Mr V. Leeladhar, Deputy Governor, Reserve Bank of India.

He was speaking at the Founders Day function of Dena Bank.

Mr Leeladhar said that the gradually increasing interest rate regime is unlikely to erode the banks' equity, given the likely increase in the net interest income (NII) and because of the RBI permitting banks to hold a larger portion of securities under the `held to maturity' (HTM) category.

Stressing the importance of technology, Mr Leeladhar said technology has made tremendous impact in banking and anywhere, anytime banking has become a reality.

While the foreign banks and the new private banks have embraced technology from the beginning, public sector banks and old private banks have not been able to keep pace with the with the developments.

He said the RBI was waiting for a couple of States who have yet to sign the memorandum of understanding on the revised vision document on urban co-operative banks.

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