Increase credit flow to productive sectors: RBI
07 Feb 2009
The Reserve Bank of India has said there is a need for lenders to enhance loan disbursals to productive sectors in order to support growth although credit growth in the banking system has been generally good.
Bank credit has grown since RBI cut its rates and taken other steps to improve the liquidity conditions in the system, RBI deputy governor Usha Thorat, said, adding, ''There is a need to ensure adequate credit flow to priority segments. We need to see how things pan out."
She said the macro, small and medium enterprises should be given time to restructure their loans in the wake of an upward bias in their non-performing assets.
Thorat, however, said, ''While lending, banks need to ensure the credit quality also."
RBI slashed its key short-term rates and cash reserve ratio for banks several times since October in order to ensure adequate credit-flow to productive sectors and low interest rates, she said.
The central bank has also infused around 300,000 crore into the system through a set of measures over the past few months, she pointed out.
She said banks should scale up operations in rural sectors by encouraging rural customers to use banking services through no-frill accounts and business correspondent models.
She also called for coordinated efforts between the state governments and banks to bring rural sectors into the banking fold.
