A combination of tightening of norms and lacklustre bourses is forcing commercial banks to shift focus from capital markets to real estate and commodities. In fiscal 2002, 32 banks have pared their exposure to capital market-related advances by 24.22 per cent but raised their real estate loans and commodity market exposures by 26.9 per cent and 32.83 per cent respectively.
In absolute terms, these banks' advances towards capital markets came down from Rs 2054.88 crore to Rs 1556.99 crore. In contrast, the exposure to real estate-related advances went up from Rs 4766.91 crore to Rs 6050.15 crore and commodities from Rs 6262.77 crore to Rs 8318.96 crore.
The list of 32 banks includes 24 nationalised banks, four old private sector banks and four new private sector banks.
Banks which have cut down their capital market-related exposures in a major way include Bank of Baroda, which brought down its exposure from Rs 209.29 crore to Rs 40.27 crore, Bank of Punjab (from Rs 143.96 crore to Rs 53.31 crore) and IDBI Bank (from Rs 51.88 crore to Rs 8.51 crore).
Banks' advances to the real estate market have risen by 26.9 per cent to Rs 6050.15 crore in March 2002, compared with Rs 4766.91 crore in the previous fiscal. Banks who have made major advances into the real estate include Bank of India which made advances of Rs 1758.37 crore, Oriental Bank of Commerce (OBC) Rs 743.25 crore, Indian Overseas Bank Rs 548.1 crore and Union Bank of India Rs 541.58 crore.
Banks' advances to the commodity markets have also seen a rise of 32.83 per cent to Rs 8318.96 crore from Rs 6262.77 crore. In the commodity market, the major players were OBC with advances of Rs 1821.82 crore, PNB Rs 773.78 crore and Bank of Baroda, with Rs 634.29 crore.
Even though overall there has been a 24.22 per cent drop in banks' exposure to capital markets, individually a few banks have jacked up their advances in the sector. For instance, Syndicate Bank's exposure increased from Rs 8.73 crore to Rs 140.62 crore, Punjab National Bank from Rs 56.09 crore to Rs 106.34 crore and Central Bank from Rs 17.84 crore to Rs 63.22 crore.
Banks' investments in equity shares have also seen a sharp rise of 93.33 per cent from Rs 670.09 crore to Rs 1295.54 crore in March 2002. Banks' investments in equity is also included in the overall limit of bank's exposure in the capital market which has been pegged at 5 per cent of advances. The banks who have made substantial investments in the equity shares in fiscal 2002 include Bank of India with investments of Rs 428.63 crore, Punjab National Bank Rs 340.31 crore and Indian Overseas Bank, with Rs 123.63 crore.
"In the aftermath of the securities scam, many of the banks had started reducing their advances to the capital market. In some of the cases, the banks had also enforced their lien on shares in case of defaults," a senior banking official said.
