Cherian Thomas and Kartik Goyal, Bloomberg
New Delhi: Indian banks should slow loan growth to high-risk businesses and give priority to lending to the productive sectors, Finance Minister P. Chidambaram said in New Delhi.
“Credit growth at 30% has to be moderated and therefore banks must rebalance their credit portfolio,” Chidambaram told reporters after meeting chairmen of state run banks. “I have asked banks to moderate credit growth to sectors identified as high risk by Reserve Bank especially, real estate and capital markets.”
Bank loans expanded more than an average 35% in years ended March 2005 and 2006, on sustained demand from companies and individuals in an economy poised to grow more than 8% for a fourth year. Bank credit expanded 27.6% on year as of 30 March, according to central bank data.
The Reserve Bank of India will announce its next quarterly monetary policy on 24 April.