Readings: External Commercial Borrowing controls, Real Estate loans, Interest rates
After almost doubling their exposure to commercial real estate in 2006-07, public sector banks, which account for more than 70% of the Indian banking industry, have grown their advances to this sector in the first three months of 2007-08 by just 1.93%. Their exposure to the capital market sector rose by 6.53% in the quarter against 79.34% in 2006-07.
. . . only 5% were on account of incremental ECB inflows. The daily trading volume on the currency market is $38 billion a day. Manipulating such a market is hard - and the change in ECB caused by today’s announcement is small. Recall that RBI purchased $12 billion in February alone - while the net ECB in the full year of 2006-07 was $16 billion.
[And yet, financial TV told us that the ECB curbs made the rupee drop fast, thereby igniting a rally in IT stocks.]
- Business Standard: Domestic credit to get costlier for firms
Over the last two months, high deposit mobilisation and low credit offtake had resulted a slight softening in short-term rates up to a year. The PLRs of banks are at 12.75 and 13.25%.
However, according to bankers, with corporates looking at rupee funding to meet their capital requirements, credit offtake would pick up sooner than expected and there could be up to a 50-100 basis points hardening in interest rates, over the next few months. The demand for credit picks up toward the end of September.
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