Check credit to realty, stock markets: FM to banks

Thursday, 19 April 2007, 07:00 Hrs
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New Delhi: Commercial banks have been asked to exercise caution while lending to some high-risk sectors like real estate and stock markets and non-banking finance companies and also to moderate the growth of credit.

"I have asked banks to rebalance portfolios," Finance Minister P. Chidambaram told reporters after a meeting here Thursday with chief executives of commercial banks and state-run specialised lending institutions.

"The credit growth at 30 percent also has to be moderated, especially to sectors identified by the Reserve Bank of India (RBI) as high-risk like real estate and capital markets," he said after a two-hour meeting.

"They have to rebalance portfolios so that adequate credit at correct prices is available to productive areas."

According to the finance minister, the government had notified 103 districts as ones dominated by minorities and banks have been asked to not only open branches there but also enhance the flow of credit there.

He said specific district plans would also be put in place in consultation with the Indian Banks Association (IBA) with emphasis on lending to minorities.

During the meeting, Chidambaram also asked commercial banks to enhance their participation in infrastructure financing and asked them to form consortiums to finance such projects.
Source: IANS
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