The Hindu Business Line : Banks’ profitability

The projection of ‘other income’ figures reveals the PSU banks’ intention to concentrate more on other business, rather than depending too much on conventional lending.

The age-old belief that banks were treated as a bunch of people accepting deposits, lending money and keeping the surplus has become old-fashioned and now banks have transformed into banking companies, prepared to do any type of remunerative business, within the ambit of regulatory norms.

But the slowdown in the trend of loan growth in PSBs should cause some worry, not only on behalf of the dip in interest income, but also due to the factor of commitment.

This assumes greater significance on account of the growth in the loan portfolio of private sector banks.

The expected cuts in deposit interest rates may help banks to increase their interest revenue, but this does not substitute the need for more credit offtake.

It is not also clear how the PSBs are maintaining their credit-deposit ratio, as deposits are on the increase across the country.

Private sector banks are in a comfortable position in profitability as well.

It is interesting to note that with enormous working freedom at hand, these banks are not concentrating more on non-interest income.

Anyhow, the banking industry has produced results in tandem with other sector industries, to give India Inc a further boost.

C. P. Velayudhan Nair Kochi