Core sector credit not sustainable: RBI

The Reserve Bank of India (RBI) has warned that banks will not be able to sustain infrastructure financing as their long-term loans have already increased to almost 40 per cent from less than 20 per cent five years ago.

Largely financed from shorter-term sources of funds, banks will have limited room to increase their long-term exposure, the RBI said in its "Report on Currency and Finance "� 2005-06" released today

The combined share of medium-term and long-term loans in banks' loan portfolio at the end of March 2005 was 47.6 per cent, up sharply from 17.5 per cent at the end of March 1995.

More than half of the term deposits mobilised in 2007 had tenures of less than a year, compared to less than a third term deposits in 2000, which will worsen the asset-liability mismatch. The RBI said inadequate long-term resources could affect India's growth, especially infrastructure development.

Bank lending to the infrastructure sector at the end of March 2006 stood at Rs 1,08,787 crore, up 37.7 per cent from a year earlier.

Power accounts for more than half the loans to infrastructure and telecommunications, roads and ports.