Indian Stock Market News and Views.
Are the banks lending more loans after the rate cut?
There has been cut in the intrust rates by the RBI lately too by 50 bps. The concern came with the Global economic conditions and slowdowns and the worsening of the economic situation at the domestic levels. The aim of the banks would be to boost the economy through credit markets. The frequent rate cuts and the pressure that the monetary policy has been passed by the RBI has actually put a hold with the actual credit deployment activity. The RBI’s latest data figures the credit deposit ratio has done a fall from 75.0 to 72.0 levels, at the beginning of the 3rd quarter. The primary reason that can be pointed out would be the fall in the demand of loans by the oil companies which was running to the banks when the prices shot the $100 a barrel mark. The next fiscal would be expected to see a rise in the credit lending to the corporate sector to grow well.
Even with the present situation banks are ready to pick up credit to any viable projects without any fear. But the general slowdown has bought in fear in the mind of the people and they are very cautious to make moves that would bring their positions at stake, thus the demand of the credit has fallen down considerably. The corporate are not getting credit with new projects but they have taken positions in keeping credit for their administrative needs. The banks in general are showing risk averseness for sectors like real estate and personal loans which they have been quite aggressive before. Due to the present condition these sectors would take time to get back to normal conditions of their business.
The corporate sector is also looking to get softening rates in intrust. The bankers meeting assured the RBI that the target of 24% for credit growth would be met. These rate cuts would not trigger the banks to make more credit. The rate cuts have failed to generate fresh demands. A further dip in the rates might trigger a growth the housing and car loan markets.
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