Banks Asked To Provide...

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[Concerned over a slow down in the economy to 8.7 per cent, the Economic Survey today suggested that banks should provide &quot;adequate credit at a reasonable cost&quot;, vindicating the rate cuts announced by the public sector lenders last fortnight. The banks have been advised to reduce their lending rates by squeezing their spreads -- the difference between the lending and deposit rates. According to the Survey, the banking sector needs to &quot;review the spreads suitably, thereby ensuring that credit offtake by the productive sectors is maintained, facilitating the growth momentum of the economy.&quot; Expressing concern over deceleration in credit expansion, the Survey said, &quot;It is necessary that credit expansion is non-inflationary and the productive sectors receive adequate credit at reasonable cost.&quot; The concerns raised by the Survey on banking sector credit assume significance in the backdrop of declining credit-deposit ratio, which dipped from 74 per cent as on 31 March 2007 to 71.8 per cent as on 4 January 2008. The Survey also warned that any further deceleration in credit provided by banks &quot;would have a detrimental impact on the overall economic growth.&quot; (PTI)