Finance Minister Palaniappan Chidambaram said on Thursday that state-run banks must moderate loan growth and cautioned banks against accepting bulk deposits at high costs.
"I have asked banks to rebalance their portfolios. Credit growth at 30 percent has to be moderated, especially to sectors identified by the Reserve Bank of India as high-risk, like the real estate and capital markets," he told reporters after meeting state-run bank chiefs.
The central bank has raised its key lending rate five times in the past one year, tightened funds available for loans and raised risk weightages for banks against loans for property development to cool demand and fight inflation.
"The banks have told me that they have started rebalancing their portfolios," Chidambaram said.
O.P. Bhatt, chairman of top lender State Bank of India, said home loan interest rates were unlikely to rise further.
"Interest rates have peaked or are near peak," he said, adding he expected credit growth of 25 percent in the fiscal year to March 2008.
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