Bankers claim to have adopted a pragmatic approach in providing credit

Mumbai, Ta. 27 August 2020, Thursday

Top officials of some of the country's public sector banks tried to dispel the impression that banks were avoiding risk-taking. There have been frequent statements by the Reserve Bank and the government that banks have been reluctant to lend.

Even in the Covid-19 era, banks have been willing to lend to strong industries, a top official of some banks said at an event.

We expect to see good economic indicators in the third quarter of the current financial year. Recovery is being seen in some sectors like automobiles and cement.

Lending is not being avoided but a pragmatic approach is being taken. Demand in the financial system should also be looked at. Loan approvals have increased but utilization has declined, Union Bank CEO Rajkiran Rai said in a panel discussion.

Banks are flexible in adopting a conservative approach to development, another bank official said while participating in the discussion. Earlier in the day, Reserve Bank of India (RBI) Governor Shaktikant Das had lashed out at banks for being too cautious.

It may be mentioned here that even in the case of low interest rates, credit withdrawals are not as expected. Deposit growth in banks has been higher than in lending, which could be considered a weak position for banks' balance sheets, a banking sector analyst said.