Chidambaram expects credit growth in public sector banks to be 'satisfactory' for rest of the year

Finance Minister P. Chidambaram on Tuesday said that the credit growth in public sector banks has been 'satisfactory', and added that he expected it to remain so, for the rest of the fiscal year.

"Credit growth has been satisfactory in the first quarter of this year - June 2013 over June 2012. Overall, credit growth has been 12.08 percent for the public sector banks. Anything that I say is only concerning the public sector banks. So, we think, that credit growth will be satisfactory for the remaining part of the year too," Chidambaram said.

Chidambaram also termed the rise in bad loans at banks as 'unacceptable', and said that he expected their Non-Performing Assets (NPAs) to come down when the pace of economic growth picks up.

"I have expressed my concern about the NPAs. NPAs is a function of the slowdown in the economy. NPAs have indeed increased, but, I want to point out that the tremendous improvement has taken place in the banking sector in the last 12 or 13 years," Chidambaram said while lauding the improvement in the banking sector in recent years.

A slowing economy has adversely affected the demand for credit and led to a rise in bad loans in banks of the country. Rising bad loans have made banks wary about lending, thus impeding the supply of domestic credit.

Net NPAs to net advances ratio of state-run lenders slipped to 1.8 percent at end-March 2013 from 1.5 percent a year earlier.