BANK ON SHORT TERM LOANS IN LINE WITH DEPOSIT TREND: RBI

RBI has told banks to focus on lending for the short and medium term against long term loans. This is due to huge asset-liability mismatches facing by the banks.As of now, the share of deposits maturing over five years is 9% of total deposits while the share of one to two years deposits have risen from 26.5% in 2006 to 40% in 2008.
The issue was raised by Dy. Governor, RBI in a recent meeting with bank chiefs. Since the average liability on the books of banks was in the range of one to two years, the banks would be better positioned to lend projects for short to medium term (three years), which in turn help banks in improving their asset-liability mismatches.
Source: http://economictimes.indiatimes.com/RBI-tells-banks-to-target-short-mid-term-loans/articleshow/5302313.cm