Indian banks should venture into the areas hitherto dominated by foreign lenders, said Deputy chairman of the Planning Commission Montek Singh Ahluwalia on Friday.
In order to take advantage of opportunities thrown open by the global financial meltdown, Indian banks should venture into the areas hitherto dominated by foreign lenders, said Deputy chairman of the Planning Commission Montek Singh Ahluwalia on Friday.
“It is a wonderful opportunity for Indian banks to occupy the space.
These fellows (foreign banks) are broke at home,” he said while answering questions on reluctance of foreign banks to provide credit to the industry.
Several foreign banks are limiting their credit exposure, as their overseas parents face credit crunch and other problems at home following the global financial crisis. Pointing out that good clients were not facing any credit crunch, Ahluwalia said it was the middle-segment borrowers who were finding it hard to secure funds from the banking sector. “Good companies are now getting credit normally.
Thing is to get that into the middle segment... We are now asking banks to lend. There are a lot of companies in the middle segment,” he said.
The main problem now was that of perception, he said, adding, there was a need to impress upon the banks that fiscal stimulus would work and the government would increase plan expenditure in the next fiscal.
The fiscal and monetary initiatives taken by the government and the Reserve Bank would have bearing on infrastructure and construction sectors and improve the economic situation, Ahluwalia said.
The government came out with two stimulus packages in the recent past to help the industry tide over the impact of the global financial meltdown.
As part of the first stimulus package, the government slashed excise duty by 4% on items other than petroleum goods.
On the monetary side, RBI took a host of measures to improve liquidity and signal a soft interest rate regime.
RBI governor D Subbarao recently said in Tokyo that there was still room for further cut in interest rates.
Impacted by the global crisis, the economic growth rate in the current fiscal is expected to moderate to 7.1% from 9% in the previous fiscal. Among the worst hit sectors is exports, which started shrinking in October after a gap of seven years.
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