The Hindu Business Line : Bank loans

This refers to the report “ Bank loan growth hits lean patch” (Business Line, September 12). When the companies are able to mobilise a huge quantum of deposits from the public by offering a higher rate of interest than the banks do, and sizeable funds through selling shares and debentures, how could we expect the banks’ lending to increase?

Moreover the formalities to be fulfilled to get a loan in a public sector bank are way too cumbersome and, hence, the corporate sector prefers public deposits to bank loans.

Unless the banks follow the competitive interest rates, both in the matter of getting deposits and lending funds (of course, without compromising liquidity and profitability) and streamline the formalities to make them public-friendly, the lean patch will tend to continue for the banking sector.

S. Ramakrishnasayee Ranipet

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