Corporate India and retail borrowers may soon get loans at cheaper rates and on easier terms. The Reserve Bank of India has advised banks to cut rates further, citing fall in inflation, easy liquidity and lower cost of funds.

RBI, on its part, has assured the availability of adequate money in the system through active liquidity management.

RBI, on its part, has assured the availability of adequate money in the system through active liquidity management.

But in the same vein, it has asked banks to regularly track their portfolios. “Banks should monitor their credit portfolios closely… and take corrective action in order to prevent undue assetliability mismatches or deterioration in credit quality,” it said.

The central bank also expressed the fear that a sharp fall in real estate prices will impact the Indian economy . However, it cautioned banks to prudently manage their balance sheet exposure to the ailing sector.

RBI was optimistic that India would emerge from the global financial crisis relatively unscathed, and bounce back sooner than expected. The country’s financial sector is stable and healthy, and “faces the major challenge of meeting credit demand without impairing credit quality,” RBI said, in a report on ‘Trends & Progress in Banking’, released on Wednesday.

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