Credit growth to speed up in few months: Bankers to RBI

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Credit growth to speed up in few months: Bankers to RBI

The current slowdown in credit growth to 14% from over 24% in January, should correct itself in a few months. Bankers met RBI Governor Subbarao for the Resource Mobilisation Meet and told the Governor that they expect credit growth to speed up in the coming months. They expect to reach the RBI target of 20% by the end of the fiscal year.

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The current slowdown in credit growth to 14% from over 24% in January, should correct itself in a few months. Bankers met Reserve Bank of India's (RBI's) Governor Subbarao for what is being called the Resource Mobilisation Meet and told the Governor that they expect credit growth to speed up in the coming months. They expect to reach the RBI target of 20% by the end of the fiscal year. CNBC-TV18's Gopika Gopakumar reports.

Here is a verbatim transcript of her comments on CNBC-TV18. Also watch the accompanying video.

Much ahead of the October credit policy, the RBI Governor met select bankers. Chairmen of eight banks participated in the meeting including OP Bhatt of State Bank of India , Chanda Kochhar of ICICI Bank and Mark Robinson of Citi Bank. Although the meeting was called Resource Mobilisation Meeting we understand from bankers that the Governor only took feedback on credit growth, interest rates, inflation and liquidity. On credit growth bankers sounded extremely positive. They said that the credit growth is expected to be in line with RBI's target of 20% and that they do not see any need for revising this target.

But bankers said that inflation could be slightly higher by March-end. They expect inflation to touch around 6%. Another issue that they discussed was regarding the bankers demand to hike the held-to-maturity (HTM) ceiling for government securities. This would allow bankers to participate in the government borrowing programme, but bankers clearly said that they could not read much into RBI's mind regarding this matter.

Finally, on rates, bankers said that they do not expect the RBI to hike rates anytime soon. They expect them to hike it only by the first quarter of next year. That is something along the lines that Deputy Governor Shyamala Gopinath said, adding that the RBI does not expect to unwind its current monetary policy stance anytime soon.