ID :
100645
Sun, 01/17/2010 - 15:15
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Shortlink :
https://www.oananews.org//node/100645
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President cautions RBI against unbridled credit growth
New Delhi, Jan 16 (PTI) Indian President Pratibha Patil
Saturday cautioned the Reserve Bank of India (RBI) against
unrestrained credit growth that may lead to bad debts, but at
the same time asked it to ensure loans to productive sectors
of the economy.
The Indian economy, the President was confident, will
grow by over seven per cent.
"If there is a lesson that can be drawn from this (global
financial) crisis is that there cannot be unbridled extension
of credit. The Reserve Bank must continuously ensure that
banks have proper guidelines for risk management," Patil said
here after releasing a commemorative stamp on the occasion of
the Platinum Jubilee celebrations of the RBI.
The President's words of caution to the RBI came amid
bankers expressing apprehensions that their non-performing
assets may rise.
On January 11, the country's largest bank, State Bank of
India (SBI), Chairman O P Bhatt had said loan defaults would
continue to rise for the next six months.
It may be remembered that the global financial meltdown
basically emerged from defaults in the housing loans.
However, the President said, "While indiscriminate grant
of credit must be avoided, credit policies should definitely
not deny finance for productive enterprises."
The funding requirements of productive sectors is
expected to increase with the rebound in economic recovery.
Patil expressed the hope that the economy may witness
over seven per cent growth next fiscal.
"Though we did see a fall in our growth rate initially we
have now risen close to 7 per cent growth rate, justifying the
correctness of our policy stance. Our growth trajectory is
expected to be higher in the coming year," she said.
Indian economy has already recorded seven per cent growth
in the first half of this fiscal and Finance Minister Pranab
Mukherjee has pegged the economic expansion at 7.75 per cent
during 2009-10.
Impacted by global slowdown, economic growth had slowed
down to 5.8 per cent in the last two quarters of 2008-09. To
spur up the economy, the government provided three stimulus
packages with revenue implications of Rs 1.86 lakh crore.
These measures have in fact started yielded results.
Economy grew by 6.7 per cent in the first quarter of this
fiscal and a stunning 7.9 per cent in the second quarter.
The President equated the global financial crisis with
Great Depression of 1930s. "The impact of the credit and
financial crisis of the last two years, in terms of lowered
economic growth rates and high unemployment rates, is somewhat
comparable to the Great Depression," she said and appreciated
the RBI's and the government's role in enabling the country
weather the impact of the crisis.
RBI was established in 1935, in the aftermath of the Great
Depression, and is celebrating Platinum Jubilee when financial
crisis is ebbing.
Mukherjee also lauded RBI's role in ensuring that the
government's borrowing of Rs 4.5 lakh crore does not leave
private sector crying for resources. PTI NAM
RBT
Saturday cautioned the Reserve Bank of India (RBI) against
unrestrained credit growth that may lead to bad debts, but at
the same time asked it to ensure loans to productive sectors
of the economy.
The Indian economy, the President was confident, will
grow by over seven per cent.
"If there is a lesson that can be drawn from this (global
financial) crisis is that there cannot be unbridled extension
of credit. The Reserve Bank must continuously ensure that
banks have proper guidelines for risk management," Patil said
here after releasing a commemorative stamp on the occasion of
the Platinum Jubilee celebrations of the RBI.
The President's words of caution to the RBI came amid
bankers expressing apprehensions that their non-performing
assets may rise.
On January 11, the country's largest bank, State Bank of
India (SBI), Chairman O P Bhatt had said loan defaults would
continue to rise for the next six months.
It may be remembered that the global financial meltdown
basically emerged from defaults in the housing loans.
However, the President said, "While indiscriminate grant
of credit must be avoided, credit policies should definitely
not deny finance for productive enterprises."
The funding requirements of productive sectors is
expected to increase with the rebound in economic recovery.
Patil expressed the hope that the economy may witness
over seven per cent growth next fiscal.
"Though we did see a fall in our growth rate initially we
have now risen close to 7 per cent growth rate, justifying the
correctness of our policy stance. Our growth trajectory is
expected to be higher in the coming year," she said.
Indian economy has already recorded seven per cent growth
in the first half of this fiscal and Finance Minister Pranab
Mukherjee has pegged the economic expansion at 7.75 per cent
during 2009-10.
Impacted by global slowdown, economic growth had slowed
down to 5.8 per cent in the last two quarters of 2008-09. To
spur up the economy, the government provided three stimulus
packages with revenue implications of Rs 1.86 lakh crore.
These measures have in fact started yielded results.
Economy grew by 6.7 per cent in the first quarter of this
fiscal and a stunning 7.9 per cent in the second quarter.
The President equated the global financial crisis with
Great Depression of 1930s. "The impact of the credit and
financial crisis of the last two years, in terms of lowered
economic growth rates and high unemployment rates, is somewhat
comparable to the Great Depression," she said and appreciated
the RBI's and the government's role in enabling the country
weather the impact of the crisis.
RBI was established in 1935, in the aftermath of the Great
Depression, and is celebrating Platinum Jubilee when financial
crisis is ebbing.
Mukherjee also lauded RBI's role in ensuring that the
government's borrowing of Rs 4.5 lakh crore does not leave
private sector crying for resources. PTI NAM
RBT
