President cautions RBI on unbridled credit growth

President Pratibha Patil today cautioned the RBI against unrestrained credit growth that may lead to bad debts,but at the same time asked it to ensure loans to productive sectors of the economy. The Indian economy,the President is confident,will grow by over seven per cent.

If there is a lesson that can be drawn from this (global financial) crisis is that there cannot be unbridled extension of credit. The Reserve Bank must continuously ensure that banks have proper guidelines for risk management, Patil said here after releasing a commemorative stamp on the occasion of the Platinum Jubilee celebrations of the RBI.

The Presidents words of caution to the RBI came amid bankers expressing apprehensions that their non-performing assets may rise.

On January 11,SBI chairman O P Bhatt had said loan defaults would continue to rise for the next six months.

The President said,While indiscriminate grant of credit must be avoided,credit policies should definitely not deny finance for productive enterprises.