Banks have room to further cut lending rates: RBI

MUMBAI: Indian banks, all of which are making profits, have more scope to further lower their lending rates, Reserve Bank of India Deputy Governor Rakesh Mohan said.

"Banks are all profitable. There is much more room for banks to cut their lending rates," Reserve Bank of India Deputy Governor Rakesh Mohan said.

Mohan observed that Indian banking system has stayed insulated to the global financial crisis, drawing strength from prudent regulations, healthy capital-base and negligible exposure to toxic assets.

"We have, as of now, no banking problems in India and non -performing assets (NPAs) continue to be low," Mohan said.

Though credit growth continues to be high, banks have not done well in providing adequate loan support to fund starved SMEs, Mohan said.

In order to improve credit flow to tiny units, banks need to revisit the risk assessment criteria of their SME clients, Mohan said.