Indian banks have enough liquidity and the industry is not facing any credit squeeze contrary to the general perception, said the chairman and managing director of Allahabad Bank.
"There is no liquidity crisis in the Indian banking system. However, the companies' credit demand has contracted due to the global slowdown and consequently the economic activity," Allahabad Bank CMD K R Kamath said addressing the media here today.
The country's deposit and lending rates were at a stable position to spur growth. "The interest rates can still come down if the consumer price index (CPI) falls along with the inflation rate," he added. CPI is a measure of the average price of consumer goods and services purchased by households.
"People are giving more value to the safety of investment in public sector banks to higher interest earnings," he said.
Commenting on the functioning of the urban cooperative banks and regional rural banks, Kamath said the Reserve Bank of India (RBI) had formed a committee to ensure transparency and better management in these banks. He replied in the negative when asked if the bank was looking at consolidation at any level as suggested by former finance minister P Chidambaram.
"Talks about consolidation are going on at different levels among the Indian banks…it is an ongoing process. However, we have no such plans in the near future," he said.
Meanwhile, the bank is restructuring and rescheduling loans worth almost Rs 125 crore in Uttar Pradesh as the repayment capacity of individuals and companies has come under strain due to slowdown.
The housing sector alone accounts for almost Rs 40 crore. Allahabad Bank has 692 branches in Uttar Pradesh, including 369 rural and 142 semi-urban branches.
