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Interest rates are set to rise making it difficult for banks to expand their credit portfolio, according to Mr P. Jayarama Bhat, Managing Director and Chief Executive Officer of Karnataka Bank Ltd.
Reviewing the performance of 10 regions of the bank for the quarter ended June 2011 here on Monday, he said banks are facing a tough time with rising inflation and tight liquidity conditions. The Reserve Bank of India has been taking several anti-inflationary measures to tame the runaway inflation. As a result of this, interest rates are set to rise, he said.
The increase in the cost of lending will affect the quality of loans leading to a surge in NPAs. Stating that increase in NPAs is a major worry for banks, he said it is essential to give attention to rein in escalating NPAs.
A press release said here that the General Manager, Mr P. Jairama Hande, briefed the members about the recent implications of monetary policy and various macro developments.
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