'No need to bring infra credit under priority lending'

RBI Deputy governor KC Chakrabarty said there was no need to classify banks’ advances to infrastructure sector as priority sector lending (PSL) saying there is enough credit flow to this critical sector.

“I have no problem in banks lending to infrastructure companies, but don’t classify that as priority sector lending,” Chakrabarty said.

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Chakrabarty said there is no problem of credit flow to the infrastructure sector, which is estimated to require investments of over $1 trillion during the 12th Plan period starting this fiscal.

The high 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.

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“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 the 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 some bankers, especially from large foreign banks, expressed reservations.

PTI