The Hindu Business Line : Chidambaram signals more credit for housing, consumer durables

New Delhi, Feb. 12 Home loans and financing for consumer durables such as cars, televisions and refrigerators could come on easier terms. The Union Finance Minister, Mr P Chidambaram, on Tuesday advised the chief executives of public sector banks (PSBs) to focus attention on delivering adequate credit for home loans and consumer durable sectors, stating that these two sectors were drivers of economic growth.

“There is some slowing down for home loans and consumer durables. I have asked them to look at these sectors to ensure that adequate credit is delivered there too. Productive sectors have not been starved of credit,” Mr Chidambaram told presspersons after his meeting with chief executives here today.

Official data show that personal loan advances of public sector banks decelerated to 20 per cent growth during April-November 2007 against 35 per cent growth in the corresponding period of the previous financial year.

In the personal loans category, growth in credit for housing and consumer durables decelerated considerably. The year-on-year increase in home loans as on November 23, 2007 stood at about Rs 32,424 crore, lower than the similar year-on-year variation of Rs 53,198 crore as on November 23, 2006.

He said the conscious slowing down in overall credit growth has to some extent affected flow of credit to home loans and consumer durable sectors. In April-January 2007-08, overall bank credit recorded growth of 12.3 per cent against 17.4 per cent growth in same period in previous year.

Bankers say that the moderation in overall credit growth during financial year 2007-08 could be partly attributed to policy measures (higher risk weights and higher provisioning in certain specific and sensitive sectors) and to an extent to hardening of interest rates.

After the meeting, many bankers said that they may go in for a round of interest rate cuts to spur credit growth. The signal that emerged from the meeting was that banks should look at reducing lending rates, without having to reduce deposit rates if possible or else reduce both lending and deposit rates, a banker said.

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SBI sees slowdown in personal loans
‘Consumer durables lending sharply up’

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