The shortage of funds in the banking system has led to a slowdown in disbursal of loans by banks. Banks are being more selective in their disbursals and are holding back fund commitment to corporate customers. A senior official from State Bank of India said the bank is monitoring loans for big projects more carefully, especially real estate loans, for which the bank is asking for higher margins and greater security. “We are being careful about big projects and are examining various parameters, because we are dealing with a scarce commodity,” he said, referring to the cash crunch. “While there is no let-up in applications for funding projects or working capital from the corporates, actual disbursal has slowed down due to lack of liquidity from the banks’ side”, said Ms Renu Challu, Managing Director, State Bank of Hyderabad. “There is no halting of lending, but it has been put on hold in some cases. And, till recently, RBI actually wanted this to tame inflation. However, now with the inflation coming down and RBI sending signals about increasing liquidity, the situation should improve,” she added.

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