Extend loan restructuring deadline: Bankers

Complain that credit need continues to be subdued in the face of slowdown

In a meeting with the Reserve Bank Governor, D Subbarao, ahead of the quarterly monetary policy end-July, bankers also demanded a relaxation in NPA norms in infrastructure lending and provisioning requirements in certain segments like housing.

Demand subdued

They also informed the RBI that credit demand continues to be subdued in the face of the economic downturn but flow was likely to pick-up by September in line with the recovery in the economy. “Though there are signs of improvement in economic activity, it is not showing in credit growth,” SBI’s Chairman and Indian Banks’ Association’s Deputy Chairman, O P Bhatt said.

Deadline extention

Bhatt said the bankers have asked the apex bank to extend the deadline of loan restructuring facility to December from June. Early this year, RBI had announced the loan restructuring facility in certain sectors facing a slowdown like real estate up to June 30.

Sufficient liquidity in the system and low inflation has provided further room to soften interest rates, Bhatt said, adding that rates are likely to stabilise in the next six months. IBA’s Chief Executive, K Ramakrishnan, said bankers also requested the Reserve Bank to manage the Government’s massive borrowing programme in an orderly manner so as to avoid any upward pressure on interest rates. Small- and-medium firms continue to be reluctant to avail credit in the backdrop of the financial downturn, he said.

“Bankers told (the RBI) that real demand is yet to pick-up,” Ramakrishnan, who attended the meeting, said.Bankers also said there was a need to look into NPA norms in infrastructure lending as loans offered to infra projects, are being termed as NPAs in the event of project delays. Bankers who attended the meeting included Canara Bank CMD A C Mahajan, IDBI Bank Chief, Yogesh Agarwal, ICICI Bank’s Managing Director and CEO, Chanda Kochhar and Standard Chartered India Head, Neeraj Swaroop.