Reserve Bank of India [Get Quote] said on Wednesday the asset-liability mismatch may pose a huge challenge for banks doing infrastructure lending, and they need to sharpen their risk management tools to avoid defaults.

"Going forward financing infrastructure is going to be a big challenge for the banking sector... a big issue is the asset-liability mismatch. . .apart from finding resources, Banks will also need to hone their skills in appraisal and management of risks inherent in infrastructure lending," RBI governor D Subbarao told an IMC-organised banking conference in Mumbai.

Asserting that major task for Indian banks is to further improve efficiency, Subbarao said, banks are not properly utilising resources efficiently and lending rates continue to be 'sticky' and 'non-transparent' to a degree.

"Although overall efficiency and productivity have improved, resources are not being utilised in the most efficient manner. There is a degree of stickiness and non-transparency in bank lending rates," Subbarao said. In the view of the global financial meltdown, Indian banks will have to buffer their capital base as it 'is obviously a standard and much needed response to risk management," Subbarao said.

On the migration to more advanced approaches, the governor said the apex bank, in consultation with banks, has finalised a time frame -- starting in April, 2010 and ending with March, 2014, to move towards the advanced approaches.

The Central bank expects to come with final guidelines on repos in corporate bonds by end-November, which is expected to boost liquidity in the corporate debt market.

The participant can pledge a corporate paper in exchange of funds for a certain period and at a rate determined by the market.

As of now, repo transactions are allowed only in central government securities, treasury bills and state development loans.

Moving ahead, Indian banks are set to increase their presence abroad, while foreign banks will have a larger presence in India, Subbarao said.

Commenting on the ongoing financial inclusion programmes, the governor said, the effort should be to give access to at least minimal financial services to the excluded rather than chasing a target.