Psu Banks Set To Post Rs 3000cr Net: Rbi Chief

The public sector banks are expected to post an operating profit of Rs 9,100 crore and a net profit of Rs 3,000 crore. This is in contrast to the net loss of Rs 321 crore posted in 1995-96.

These figures were used by C Rangarajan, governor, Reserve Bank of India, to substantiate the point that the bottomline of the Indian banking industry has improved.

Rangarajan was speaking at a function to launch Corpclassic, a high tech, high return and highly liquid deposit scheme offered by Corporation Bank.

The RBI governor said at a time when the banking industry is becoming very competitive, there is a need for banks to launch new innovative products or build new elements into old products.

 

Hence the step taken by Corporation Bank in this regard is one in the right direction.

In the emerging scenario, he said the banks have to improve their operational and allocational efficiency.

Commenting on the recent cut in the Bank Rate effected by the central bank recently, he said it is heartening to note that banks have taken cognizance of the signal sent by RBI that interest rates were headed lower.

This is reflected by the fact that a handful of banks including State Bank of India, Corporation Bank, Union Bank and Central Bank have already cut their rates.

Explaining the rationale behind the rate cut Rangarajan said there was a build up liquidity in the banking system on accounting of deposit growth of over Rs 13,000 crore and credit off-take to the tune of less than Rs 800 crore.

Pointing out that the growth in credit off-take is generally negative in the first quarter of the financial year, the governor said he was optimistic of higher disbursal of credit in the second half of the financial year.

Reuter adds:

TheRBI will stick to a growth target of 15 per cent in money supply for 1997-98 (April-March), Rangarajan said. "Given an inflation target of 6 per cent and gross domestic product growth (GDP) of 6--7 per cent, we feel a M3 growth of 15.0-15.5 percent is the right rate of money supply growth," he said.

"It is important to contain inflationary pressures as only this will lead to a sustained fall in interest rates," he said.

"So we will keep M3 growth within a 15 per cent to 15.5 per cent band." Year-on-year growth in M3 was 16.6 percent for the fortnight-ended June 6 against 16.4 per cent the previous fortnight. Rangarajan said the projected growth in M3 will provide adequate funds to banks to increase commercial lending by around 20 percent during the current financial year.