MUMBAI: State-run banks, other than State Bank of India , have been lagging far behind their private sector peers when it comes to lending. While the industry growth rate itself may be barely in double digits, PSU banks, barring SBI , are growing at a paltry pace over the past two quarters pushing back hopes of any recovery in investments. Loans at state-run banks (other than SBI) grew just 1.4% in the March and June quarters, the lowest in past four years, data from the Reserve Bank of India shows. Poor capital positions, risk aversion and top corporates moving to bond markets are among the reasons why these banks which once thrived on project financing are lagging.“With most of their funds stuck as provisions against NPAs, public sector banks have neither been able to generate fresh capital nor free up their existing resources,“ said Kuntal Sur, partner, financial services (risk and regulation), PwC India. With the government tightening its purse, access to funds for public sector banks has become difficult, he said.While SBI managed 10% loans growth, private sector lenders are growing faster at 25%.

Source: Economic Times November 02, 2016 05:52 UTC