Bankers expect the Reserve Bank of India (RBI) to address some of the structural issues in its mid-term review of monetary and credit policy, to be announced next week.
The issues range from phasing out of refinance facilities to rationalising of export credit, retailing of gilts, renewed focus on floating-rate deposit liabilities and recasting priority sector lending norms.
In September, last year, the RBI cut the export credit rate. It had asked banks to charge a maximum rate of 250 basis points (one basis point is one hundredth of a per cent) below their prime lending rate (PLR), compared with 150 basis points.
Since banks have different PLRs, export credit rates vary from bank to bank. So, it is ideal to link the rate to bank rate to bring in uniformity in export credit rates, bankers surmised.
Even though the RBI has been pushing banks to introduce floating-rate deposits, these instruments have not become popular. In order to make them attractive, the central bank may allow call and put options on such deposits which will give freedom to banks and depositors to terminate the deposit prematurely without any penalty.
Besides, there is a need to evolve a suitable anchor on which the interest rates can be pegged. At present, some banks are using 365-day treasury-bill yield as an anchor to fix floating-rate deposits.
Bankers have been for quite sometime pitching for inclusion of infrastructure lendings as part of priority sector lendings. They also want the regulator to take a relook at the present format of sub-targets of priority sector lendings.
Within the 40 per cent priority sector lending limit, lendings to agriculture, small-scale industries have sub-targets and banks are required to meet them as certain percentage of the outstanding priority sector lendings.
Bankers want these targets to be fixed at a reasonable level over the previous year
