Bank credit growth, which has been in a slow lane, is expected to revert to double-digit growth next fiscal, according to SBI Chairman Rajnish Kumar. The country's largest lender confirmed that it may miss its credit disbursement target set for the current fiscal, but is hopeful of a revival in FY21.
"We are trying to push it up (credit offtake) this fiscal, but we may find it difficult to reach the target. Hopefully, we will be in double-digits next fiscal, that's what the target will be," Kumar said. For FY20, the bank aimed at a credit growth of 10-12 per cent, but given the slack in demand, particularly from the corporate sector, the bank is likely to exit FY20 with total advances growing in single digits. As per the latest RBI data, bank credit in 2019 stood at 7.1 per cent.
Speaking to TNIE on the sidelines of ThinkEdu Conclave here Thursday, Kumar, however, said working capital needs of enterprises and retail loans, including housing loans, are already seeing an uptick.
According to Kumar, the bank is also actively looking at the infrastructure sector to lend. Stating that the government's recent thrust on infrastructure investments to the tune of Rs 102 lakh crore was essential to drive GDP growth, Kumar said, banks will have to manage credit risks arising out of the sector.
"Infrastructure investments are essential in picking up the GDP growth rate and the quality of infrastructure in India is sub-optimal. I think there's no other way but to invest in infrastructure. May be this year, we'll continue that (lending to infra)," he explained.
Meanwhile, Kumar reiterated that the current quarter will be good in terms of loan recoveries. "The December 2019 quarter was good in terms of recoveries and March 2020 quarter will be even better. Because, we have got monies back as expected and many more will come in the next few months," he added.
As for crisis-ridden NBFCs, Kumar was of the opinion that the situation has subsided and that India's shadow bankers are in a much better position than what they were in. "Things are under control. It's unlikely that the situation will flare up," he said.