Bankers expect measures to enhance industry growth

With the Union budget for FY10 set to be announced tomorrow, bankers expect measures to push industry growth, particularly in infrastructure, which will help them to lend more.

"If the budget comes with steps to relax investment norms in various sectors and announce plans to increase infrastructure spending, that will definitely help banking sector to participate in the growth story," Axis Bank's President, Credit, Partha Mukherjee said.

Given that infrastructure is a key-component to support the economic growth, the UPA Government is widely expected to announce measures to facilitate more investment in the sector.

IDBI Bank's Chief Financial Officer, R K Bansal echoed this view saying that improvement in infrastructure spending is critical for the banking sector.

"If the Government is coming with a good plan to improve infrastructure spending, this could help banks to assume a major role in funding these projects," Bansal said.

Kotak Mahindra Bank's Head of retail liabilities, K V S Manian said a co-ordinated action from the Reserve Bank and Government is likely to contain the fiscal deficit and to hold interest rates low.

There could be a co-ordinated action from RBI and Government in the near future. A 0.25-0.5 per cent cut in Reserve Bank key rates cannot be ruled out, Manian said.

Indian Banks Association's (IBA) Chief Executive, K Ramakrishnan said there is a need to relax the tax-burden on term deposits to make it more attractive to the public.

There is a need to introduce tax exemptions on term deposits, especially for senior citizens. Corporate tax rates should also be eased, Ramakrishnan said.

Ramakrishan said the Reserve Bank is likely to maintain a status quo in its key-rates and is unlikely to cut rates in the near future.