The Hindu Business Line : Will keep investments unhampered: Bankers

According to Mr Cherian Varghese, Chairman and Managing Director, Union Bank of India, the overall sentiment is positive. "The fear was that banks would be forced to increase their lending rates if RBI had increased the reverse repo rate by 25 basis points. Now that fear is not there," he said.

In fact, investments in certain critical areas will power the economy over the long run, said Mr Ramesh Sobti, Executive Vice-President and Country Representative, India, ABN Amro Bank.

"We don't see investments slowing anytime soon as there is still need for fresh spending in a range of areas from research in bio-technology to building new highways and ports," he said.

On the increased risk weights for all outstanding commercial real estate exposure of banks, Mr Sobti said that this could also perhaps be an indication of a possible rate hike in the next quarter. "There is a risk of overheating in some sectors in India, such as construction, where the price of land is booming as shopping malls, homes and office buildings proliferate. Hence, the possibility of interest rates being raised in the next quarter, possibly in the half-yearly policy review, cannot be ruled out," he said.

However, Mr Varghese said that there was need to review the inclusion of hotels and warehouses as part of commercial real estate.

"Hotels are part of the services industry and these investments should be encouraged in order to promote tourism," he added.

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Will keep investments unhampered: Bankers