Indian banks look at buoyant steel sector

New Delhi : The steel sector which has plans of pumping in Rs 2.71 lakh crore in the next few years would drive the ongoing credit growth in the banking industry. With the revival of the steel sector and significant reduction in the level of non-performing assets, most banks are looking at the sector with renewed interest.

Though the steel companies would use their internal resources to fund their proposed Greenfield and Brownfield projects, about 70% of this sum would have to be funded by banks. Even international majors like Posco are looking at domestic sources for funding to the tune of Rs 5,000 crore in the next few years.

Banking industry has seen a credit growth of about 30% in the current year. This may increase further once the proposed projects are started. A large number public sector banks are looking at raising funds through the issue of hybrid instruments, which have been recently announced by the Reserve Bank of India. The ministry has also asked them to rev up their deposits to match the credit demand.