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| Bankers expect Budget to focus on infra, rural eco |
| Press Trust of India / Mumbai Jun 07, 2009, 15:27 IST |
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The UPA Government's focus will be on infrastructure, rural economy and education in the forthcoming Budget, a top banker said.
"We expect the main focus to be on infrastructure, rural economy and education in the Union Budget," Bank of Baroda Chairman and Managing Director M D Mallya told PTI here.
About the agenda of next week's meeting between bankers and Finance Minister Pranab Mukherjee, Mallya said it would be the routine quarterly meeting. The discussions with Mukherjee will centre around credit demand, interest rate scenario and performance of the corporates, he said.
Mukherjee is scheduled to meet captains of public sector banks and financial institutions on June 10 when he is slated to lay down the new UPA Government's strategy, especially in areas of infrastructure and rural development.
At the meeting, Mukherjee is expected to review banks' annual performance with special reference to lending to key areas like agriculture, micro, small and medium enterprises, housing and education.
Finance Ministry officials have been collecting data from banks relating to lending to these key areas.
"Credit growth has not been significant in the last two months. However, we expect stronger demand in credit growth in Q2 FY 10," Mallya said.
"We expect the FM to ask banks to reduce the benchmark prime lending rates (BPLR) by a minimum of 50 basis points," said one bank head who did not want to be named.
Over the last six months or so, banks have typically reduced BPLR by around 150 basis points. Significantly, in its latest communication to banks on June 2, the Finance Ministry asked banks to furnish details of BPLR and interest rates for vehicle loans, consumer loans, housing loans and SME loans.
State Bank of India Chairman O P Bhatt last week said that there is scope for SBI's lending and deposit rates to come down by at least 25 basis points before the end of June.
"Credit growth has not been significant in the last two months. However, we expect stronger demand in credit growth in Q2 FY 10," Mallya said.
"Interest rates are expected to come down. A sharp cut in deposit rates can be expected which can come down to 6 per cent," Indian Overseas Bank Chairman and Managing Director S A Bhat said.
"We are working out our cost of deposits. It will come down depending upong retail inflation rates. We see credit growth picking up soon. We also see inquiries from fertiliser, airlines and retail sectors, Bhat said.
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