Wednesday, August 20, 2008

Indian banks show better growth in loan segment than last year

Replying to the question on interest rate, whether growth in loans sector has gone down with the hike in interest rates the Reserve Bank of India (RBI) deputy governor V. Leeladhar said growth in loans by Indian banks has been better as compared to the last year.

He said the credit growth has been healthy although the pace of retail lending has slightly slowed down, he added that farm loans are expected to pick up.

"The growth of advances is far better than what it was last year. Something like 26 per cent against 20 per cent, which we have been projecting," he said in Bangalore.

In July RBI raised its key lending rate to a seven-year high of 9 per cent to control in double-digit inflation.

He said due to higher rates credit growth might slow down, though that could not yet be determined.

According to RBI data loans disbursed by Indian banks as at Aug 1 were 25.8 per cent which is higher than a year earlier.

On being asked whether banking sector reforms to allow foreign competitors to buy local banks will be unveiled next year, Leeladhar in a reply said it will all depend on the review.

He added, "I can't foresee what will be the findings of the review".

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