While the demand for credit from corporate sector is still low, Jyoti Ghosh, Managing Director of State Bank of Bikaner & Jaipur tells Sumit Sharma he expects the trickle of demand to increase significantly in the fiscal’s second half. Excerpts:
What’s your outlook on the economy?
Outlook on the economy remains positive but due to some bottlenecks credit off-take was not happening. RBI rate cuts are helping. Green shoots are visible. September-end onwards things will move much faster. There are some inquiries for energy financing and infrastructure but it’s a trickle not a flow as of now. We cut our base rate to 9.95% in the hope of credit off-take.
Which segments do you see leading growth in second half?
Infra could lead. We are looking at retail. Textile, iron & steel, cement should move with infra bottlenecks being opened up and other linked industries should start picking up.
Do you see much credit demand from corporate sector?
We get stray queries. We don’t see large ticket. Queries are coming from renewable energy, solar and wind in Rajasthan, commercial real estate, expansion projects in textile and some other industries. I expect this trickle to become a flow very soon.
How critical are interest rates for stronger growth?
Interest rate in economic growth is just one of the factors. Bottlenecks have to clear, demand push has to be there for better productivity, and export market has to improve. Rate cut is one of the many factors, not alone. Lenders and government are positive about the economy and intend to take it forward. The onus now is on the corporate sector to move forward.
How do you plan to curb NPAs – restructure or sell?
SBBJ’s gross NPA is 4.14%. We have stress in 2-3 large accounts and are working to help them along. But if the economy itself doesn’t grow it will throw all segments of industry under stress. Iron & steel is under stress because of dumping and lack of demand. We are expecting some changes in rates and duties to protect the domestic industry. Otherwise, there could be huge loss of employment and government money invested through PSBs.
Do you plan to sell the NPAs to ARCs?
If one sees viability, then restructuring is the alternative so that they come out of the stress as soon as economy moves and one can upgrade them within a year. Else the alternative is to sell it off.
Could banks begin to change management of companies with RBI giving powers?
RBI has given this incentive to PSBs as a measure to handle stress. But there are issues such as who then runs the company. Banks are financiers and not experts in running an industry. Then, what do you do with its shares – since you can’t hold more than 30%. Likewise, many ground rules need to be changed. It’s an excellent idea that will let the promoter directors know that the chance of company going to professional hands is real.
How do you prevent PSBs losing customers to private banks?
PSBs are not much behind in technology. RBI sees it very positively. I don’t see private sector banks much of a threat to us. Our alternative delivery channels are picking up. We have 1,800 ATMs and 1,262 branches, most of them in Rajasthan. Our market share is good at 23-24% in deposits and 18-19% in advances. We have set a 30% market share target in advances and deposits by March 2016.
Any capital raising plans?
Yes, we are planning to raise capital but can’t disclose details at this stage.