President cautions RBI against unbridled credit growth | business | Hindustan Times
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President cautions RBI against unbridled credit growth

President Pratibha Patil cautioned the 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.

business Updated: Jan 16, 2010 16:46 IST

President Pratibha Patil on Saturday cautioned the 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, 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.