Banks are likely to press for commitment fees on unutilised credit limits from large and mid-sized corporates as they are utilising only about a third of their sanctioned credit limit in the current scenario of low credit appetite, say bankers.
While banks may not realise the commitment fees from AAA-rated corporates and central public sector undertakings classified as maharatnas, navratnas and some miniratnas for fear of losing business, others will have to pay it if they don’t utilise the sanctioned credit limits.
“Banks usually charge between 0.50-1 per cent of the unutilised credit limit from companies as commitment fees,” said Union Bank of India MD and CEO Rajkiran Rai G, on the sidelines of HR conclave organised by the Indian Banks’ Association.
According to the Reserve Bank of India’s scheduled banks’ statement of position in India, credit growth in the first half slowed to 8.74 per cent year-on-year (y-o-y) up to September 27, 2019 (vis-a-vis September 28, 2018), against 12.38 per cent y-o-y growth up to September 28, 2018.