Banks cut down lending to commercial sector

In 2009-10, the lenders such as Jammu & Kashmir Bank, Union Bank of India, ICICI, Bank of India and Canara Bank reduced lending to the some sectors of real estate. As per the data provided by banks, the largest private sector bank, ICICI reduced its lending to realty by 17 % and to capital markets by almost 10 %.
However, the public sector banks such as Bank of Baroda, State Bank of India, Syndicate Bank and IDBI Bank rose lending to these sectors between 34% and 46%.
Among the private banks, rank 1 lender was YES bank, next was IndusInd Bank, and followed by Development Credit Bank and HDFC Bank.
Other than ICICI bank which reduced its lending by 9.6 %, the total growth in the lending to realty was around 16.7 % in the fiscal 2009-10.There was a mixed response from the banks. On one hand, around 10 banks rose lending by 30% each, while on the other hand, 14 banks witnessed a decline in lending.
After all these ups and downs, the exact scenario was that the lending to the residential sector increased from 47.5 to 53%, and commercial mortgages reduced from 27.7 to 23.3%.

SBI May Give Reason to Cheer

Bank to every Indian
Photo by RamN
March 25, 2010

After the budget 2010, SBI brings a gleam of hope for home loan borrowers as it plans an extension in the home loan relief plan.

SBI, the State Bank of India, one of the largest lenders in India, has indicated that although there would be slight changes, but it may still consider continuing its much-talked-about 8 % home loan scheme. One of the top officials of SBI said that even though they bring modifications in their products, which tune with their liquidity position normally they don’t kill any product. However, the banking major have not yet formally announced the extension of the bid whose tenure gets over on March 31.

The corporations like ICICI Bank and mortgage lender Housing Development Finance Corporation which are the major competitors of SBI also copied this scheme of SBI but later withdrew them because the RBI disapproved such products and drying liquidity.

But according to the officials it is one of the best home-loan plans in the market since it assisted other sectors to grow like cement and steel. It is a very successful offer. It also tremendously contributed to the overall economic growth.

However, the ‘teaser’ schemes were not liked by the Reserve Bank since it was related with the ability of customers to pay the rates of interest when it got back to the usual level after the period of this scheme expires.

RBI Deputy Governors, Usha Thorat and K C Chakrabarty, had openly expressed their concerns about the scheme. “Teaser rates…