Public sector banks have decided to reward its loyal customers. Even as the credit meltdown spread deeper and wider, older and existing customers need not worry about their credit requirements. Existing customers will be given preference over new applicants who have been banking with private and foreign banks.
A Finance Ministry official, who asked not to be identified, said that all state-run banks will honour committed lines of credit or even an enhanced requirement of an existing borrower. "Unless there is a big risk perception on a particular borrower, all PSU banks will meet their demands," he told Hindustan Times.
New customers, who may wish to switch from a foreign or a private sector bank, may, however, find it difficult to get credit. In the wake of global financial crisis and a rising fear among consumers to bank with foreign and private banks, there have been a large number of borrowers who have approached PSU banks for credit.
“These fresh customers will get credit only if PSU banks are sure that their existing customers will not be impacted in any way,” the official added.
Many private and foreign bank customers are also switching to public sector banks because their banks are not willing to lend in view of the global financial meltdown.
Public sector bankers, however, said that there is no immediate lending cash shortage for PSU banks following several steps taken by the Reserve Bank of India.
Banking industry sources said that foreign and private banks have faced a certain credit crunch in the last few months. "These banks are more integrated with the global financial fabric and it is natural that they have been impacted more," said a bank economist who did not want to be named.
In the current financial year, PSU banks have shown about 25 per cent yearly growth in advances so far.