Major banks may face asset-liability mismatch

NEW DELHI, NOV. 28. Major public sector banks including State Bank of India, Bank of Baroda, Bank of India, Punjab National Bank, Oriental Bank of Commerce and Corporation Bank, may witness an asset-liability mismatch after five years on account of their overdrive in long-term financing.

Although banks are not permitted to mobilise deposits above ten years, most of them are advancing loans that would mature after 10-20 years, banking sources said.

The surge of funding long-term projects including housing loans have created a situation where most of the major banks' balance sheets reveal that loans maturing over five years far exceed their deposits and borrowing in the same maturity period.

The Reserve Bank of India has earlier asked banks to disclose the loan amounts maturing after five years and not to extend loans to real estate builders after the South Asian crisis while the National Housing Bank has made similar directive to housing finance companies to avert a crisis.

The balance sheet of SBI shows that the bank has term deposits and borrowings above five-year maturity at a little over Rs. 5,400 crores but its loan advances maturing after five years were a whopping Rs. 12,600 crores.

SBI, apart from infrastructure finances, has raised its exposure in housing sharply from Rs. 3,369 crores in March 2000 to Rs. 6,029 crores till September 2001.

PNB's advances for over five-year maturity amounted to about Rs. 4,000 crores including Rs. 1,555 crores in the housing sector, while long term deposits were Rs. 1,000 crores.

Bank of Baroda's long term advances are more than double at Rs. 1,400 crores than its long term deposits, while Bank of India's advances stood at over Rs. 4,100 crores but deposits were at Rs. 2,500 crores.

BoB has doubled its housing loan exposure to Rs. 1,222 crores till September 2001 from Rs. 671 crores in March 2000.

Union Bank of India also has more than double the assets locked in long-term loans as against Rs. 764 crores in long-term borrowings.

Corporation Bank and Oriental Bank of Commerce also reveal similar trends.

Corporation Bank's loans over five years amount to Rs. 2,440 crores while long term deposits are worth Rs. 174 crores till March 2001. The bank's housing exposure was up by 50 per cent to Rs. 1,086 crores in September 2001 from Rs. 690 crores in 1999- 2000.

OBC has a commitment of Rs. 657 crores for long-term borrowers, but has advanced loans worth Rs. 1,560 crores that would mature after five years.

The bank's housing loans increased from Rs. 98 crores in 1999- 2000 to Rs. 946 crores till September 2001.

Canara Bank, Indian Overseas Bank and Punjab & Sind Bank have exposures in long term loans less than term deposits.

- PTI

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