Money & Banking
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Credit Policy
Lending rates may harden by Dec, says PNB chief
Our Bureau
New Delhi
,
Oct. 25
THE Chairman and Managing Director, Punjab National Bank, Mr S. C. Gupta, said that there is a likelihood of a slight upward movement of about 25 basis points in lending rates by December-end.
"At present, there is enough liquidity in the system. But as we go ahead, the liquidity situation may tighten due to robust demand for credit. Demand for credit is rising from all sectors, including manufacturing, services, SSI, retail, infrastructure and agriculture. "So liquidity may harden in the days to come and there may be a slight upward pressure on interest rates of about 25 basis points around December-end," Mr Gupta told Business Line after RBI's announcement of the mid-term review of the credit policy.He felt that the revised capital market exposure limits for banks might have a positive impact on market sentiments. "The revision of capital market exposure norms signals that banks might become major players in supporting the market," he said.
Mr Gupta said that PNB would be working out the numbers on the revised amount of funds that would be available to the bank for capital market investments.
He said that the increase in the provisioning requirement for standard assets from 0.25 per cent to 0.40 per cent was probably aimed at preparing banks for meeting the stiff capital adequacy requirements under the Basel-II norms.
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