Reserve Bank of India (RBI) deputy governor V Leeladhar said the banking sector’s growth in advances surpassed expectations. The credit growth in July 2007-June 2008 was around 26 per cent as against the expected 20 per cent.
“The credit growth has been healthy although retail lending has slightly slowed down in the first few months of the current financial year and the farm loans were expected to take off further in the coming months,” he said.
Talking to reporters after launching SBI’s new loan product in Bangalore, Leeladhar said, “The growth in advances is far better than what it was last year. Something like 26 per cent against 20 per cent which we have been projecting on a year-to-year basis.” Higher interest rates may slow down credit growth although that could not yet be determined,he said.
Asked whether banking sector reforms were to be unveiled next year, Leeladhar said it depends on the review that will be done in March. “I can’t foresee the findings of the review,” he said.
State Bank of India Chairman, O P Bhatt said the bank’s plans to merge all the seven associate banks with itself will largely depend on how the ongoing merger with State Bank of Saurashtra proceeds.
“We don’t know. We have to see how quickly and smoothly it proceeds, what difficulties we have and how people feel about it. Then we will take it from there, depending on the experience,” he said.
Talking to reporters after the launch of SBI’s new loan scheme for poor heart patients in association with Narayana Hrudayalaya, he said, “I don’t think there is an employee backlash to the merger.” Some employees at the State Bank of India and State Bank of Saurashtra struck work on Monday to protest the merger.
“I don’t think there is an employee backlash. There are some people who have called a strike for some reason. But if you talk to the employees of the bank or associates, they are very happy this is happening,” he said.
Asked whether the strike planned for Wednesday would hinder the merger with State Bank of Saurashtra, Bhatt replied, “I don’t think so.” Bhatt also said credit growth this year was much better than last year, without giving much explanation.
