Bankers to watch markets for a month before deciding rate cuts

Bankers on Friday said they expect a 26 per cent annual growth in their advances,but would watch market conditions for a month before deciding on lending rate cuts....

Written by ENS Economic Bureau | Mumbai | Published:February 28, 2009 1:17 am

Bankers on Friday said they expect a 26 per cent annual growth in their advances,but would watch market conditions for a month before deciding on lending rate cuts. In a meeting with RBI governor D Subbarao here,bankers assured the apex bank that they would look at the possibility of further rate cuts if the market situation favours such a course.

“Credit growth is satisfactory. The expected credit growth on a year-on-year basis is 26 per cent. Whatever rate cut is possible will be done,” UCO Bank CMD S K Goel told reporters here after the meeting. “Deposit rates have to come down first before we can cut lending rates. That may not happen immediately,” Goel said.

With the RBI widely expected to trim its policy rates in

the backdrop of falling inflation,banks may wait for further policy signals prior to taking a call on revising their rate structure.

Private sector banks,many of which are yet to respond to RBI cues for a rate cut,have also assured the Reserve Bank that they would do so,Goel said. Other issues discussed at the meeting included rising NPA levels in export-oriented sectors such as textiles,manufacturing and chemicals and the impact of the stimulus packages on the economy.

Bankers who attended the meeting included Punjab National Bank CMD K C Chakrabarty,Bank of Baroda CMD M D Mallya,ICICI Bank MD and CEO K V Kamath among others.

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