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Banks have scope to reduce lending rates: Subbarao

Last Updated: Tuesday, July 28, 2009 - 16:47

Mumbai: Reserve Bank Governor D Subbaro on Tuesday said there is scope for banks to lower lending rates
further.

"Banks say that the demand for credit is picking up on
the back of investment in projects...Banks have scope to
reduce the lending rates," Subbarao told in his customary
post-credit policy press conference, justifying the bank`s
decision to keep the key rates unchanged.

The RBI governor said bankers informed him that the
demand for credit in certain segments like home and retail is
picking up, which was a welcome sign.

Subbarao said he saw visible signs of economic
recovery. However, he said, there are certain risk factors in
the economy, especially in the farm sector, given the
uncertainty over the monsoon.

He expressed concern that the performance of farm sector
could have a spill over effect on the industrial sector as
well.

Subbarao also felt that exports have not picked up,
recording a slowdown for the last eight months. Though exports
form only 15 percent of the GDP, it could pose risks to the
economic revival, he said.

Bureau Report

First Published: Tuesday, July 28, 2009 - 16:47
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