Worried RBI calls bank CEOs

The RBI has called chairmen of a few large public sector banks on Friday for a meeting to urge them to lend more and not hold on to cash, banking sources said.

A sharp fall in credit growth has made the Reserve Bank of India (RBI) to act fast.

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The RBI has called chairmen of a few large public sector banks on Friday for a meeting to urge them to lend more and not hold on to cash, banking sources said.

The year-on-year credit growth fell to 19.54 per cent as on February 13, from closer to 25 per cent till a couple of months ago and against the RBI’s target of 24 per cent.

Banks, instead of lending, have been parking surplus liquidity with the Reserve Bank, which fetches them 4.0 per cent interest.

The amounts deposited with the Reserve Bank have ranged from Rs 70,000-Rs 78,000 crore this week.

The sources in the industry said banks are reluctant to lend in the current market conditions, wherein a large number of both individuals and companies are passing through financial difficulties.