Bank credit to infra sector rises

Bank credit to infrastructure sector rose over 100 times to Rs 786,045 crore in 2012-13 from Rs 7,243 crore in 1999-2000, Reserve Bank of India (RBI) said
in its annual report.

The report shows that credit exposure of banks to infrastructure sector has been deteriorating since 2011 owing to the economic slowdown and the emergence of sector-specific issues amid structural bottlenecks in the economy.

Meanwhile, the report says banks may face pressure while moving to the Basel-III guidelines. Basel-III mandates that banks maintain a capital adequacy ratio of 8 per cent.

Over the next three years, the credit needed to finance economic growth would rise, the central bank said. This would strain the capital position of banks, it said. It may be noted that the RBI fixed the minimum capital requirement for Indian banks at 9 per cent.

Also, there is likely to be a considerable fiscal burden on the government if it wants to maintain its majority shareholding in public sector banks.