Banks are paying more attention to retail loans than corporate sectors

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Mumbai, Ta. November 15, 2019, Friday

Given the poor position of companies, they are now paying more attention to retail loans, considering that they are at risk of providing loans. Banks believe retail loans are more secure and profitable than corporate loans.

Corporate loans have been declining in most banks. Banks consider it appropriate to provide loans only to companies that are viable and not to any group.

The Reserve Bank has instructed the banks to share the risk. In this notice, the Reserve Bank directs banks not to lend more than twenty percent of their eligible capital to a borrower. For the last few years, banks facing a massive NPA have been turning to security.

Corporate loans have been declining for the past three-four years, said one analyst. Banks' credit to companies is also falling due to slowdown in various sectors. The Reserve Bank has also increased the requirement for Tier One Capital.

Banks had to maintain seven per cent Tier One capital in March 3, which will be increased to 8.5 by March 7.


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