The Hindu Business Line : Credit growth likely to pick up on falling inflation

Kolkata, Dec. 21 With the inflation coming down and interest rates heading southward, there will be a pick-up in credit demand, said senior bank officials. The credit growth of banks has slackened for the past few months because of the slowdown in demand and high interest rates.

Speaking at a banking seminar organised by the Indian Chamber of Commerce here, Mr S.C. Gupta, Chairman and Managing Director, United Bank of India, said, “With the inflation coming down and interest rates heading southward, we expect the demand to pick up giving a fillip to credit growth.”

Banks were not reluctant to extend credit but there was a genuine lack of demand, said Mr Balasubramanian, Chairman, City Union Bank. “It is not right to say that banks have been shying away from extending credit; there has been a slowdown in demand. Many companies have put their expansion plans on hold due to the economic situation. Moreover, property prices had also peaked and people were waiting for it to come down,” he said. Now with the prices and interest rates coming down, there could be a pick-up in demand, he observed.

Boost confidence

According to Ms Meera Sanyal, Chief Executive Officer, ABN Amro Bank, there was a need to boost consumer confidence. “A number of measures have been taken by the central bank and the banking system on the whole in order to address issues on the supply side,” she pointed out.

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