Mumbai: The loan growth of Indian banking system has dropped below 20%, reflecting the economic slowdown.
According to the latest Reserve Bank of India (RBI) data, released on Friday, the year-on-year loan growth of the banking system dropped to 19.3% as on 30 January.
In four weeks between 2 January and 30 January, the outstanding loan portfolio actually shrank by Rs22,659 crore, signaling increasing risk aversion of banks.
Meanwhile, the government has warned to act tough with private and foreign banks if they don’t improve their lending to the small and medium enterprises.
“If they don’t comply with RBI direction, at some point of time, the government will be forced to act,” news agency PTI quoted commerce secretary G K Pillai on the sidelines of a seminar in New Delhi. “I have no hesitation in saying it...they (private sector banks) have been fair-weather friends, unlike the public sector banks,” he said.
PTI also contributed to story