RBI Deputy governor KC Chakrabarty today ruled out classifying banks' advances to infrastructure sector as priority sector lending (PSL) saying there is enough credit flow to this critical sector to even make the central bank worried.
"I have no problem in bank’s lending to infrastructure companies, but don't classify that as priority sector lending," Chakrabarty told reporters, on the sidelines of a banking summit organised by the industry lobby Ficci and the Indian Banks Association in Mumbai.
However, he added that small-ticket lending to the infrastructure sector can alone be classified as priority sector, provided it meets the required norms.
Explaining further, Chakrabarty said there is no problem of credit flow to the infrastructure sector, which is estimated to require investments of over USD 1 trillion during the 12th Plan period starting this fiscal.
The credit flow to the infra sector, which involves longer gestation projects, from banks worries the Reserve Bank due to the likely asset liability mismatches, he said.
"Infrastructure has no problem of credit. In fact, we are worried that banks are giving too much credit to infra companies," he said, without pointing their exact concerns.
Even after coming out with the final guidelines on priority sector lending norms in July after the customary consultative process, Governor D Subbarao had said during July 30 credit policy that the central bank would be revisiting the norms after a slew of bankers, especially large foreign banks, expressed reservations.
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