HYDERABAD: The quantum of banking sector’s bad loans are unlikely to shoot up next fiscal from 9.1 per cent of total advances as on September 2019, said SBI chairman Rajnish Kumar. According to him, for SBI the gross Non-Performing Assets (NPAs) will continue to slide down this fiscal, despite the looming threat of stressed loans in both the non-banking and real estate sectors going sour. “It doesn’t look like the bad loans will rise,” Kumar said. For SBI, gross NPAs as a percentage of total advances fell to 7.2 per cent as on September 2019, against 9.95 per cent a year ago.
But the dampener this fiscal will be bleak credit growth, which Kumar expects to remain in single digits. But given the huge pipeline of infrastructure investments, credit growth will likely pick up next fiscal.
“The government’s $1.4 trillion infrastructure investments need to be addressed. We (country) require huge amount of money,” Kumar said, implying the contingent role public sector banks will take on in the coming quarters. For instance, infrastructure investment will increase by over 40 per cent in FY21, a significant part of which will be extended by banks.
Addressing the audience at an event organised by Federation of Indian Chambers of Commerce and Industry (FICCI) in Hyderabad on Saturday, Kumar said private investment will have to drive the investment cycle. According to him, the government’s $5 trillion growth target was doable, but whether it can be achieved within the set five-year time frame remains suspect.
“We will definitely achieve, there’s no doubt. Whether we’ll achieve it in five years is a very difficult question to answer. But we will achieve $5 trillion for sure and I am saying again that it will come on the back of private sector investments,” Kumar said, adding that government spending alone won’t be enough. The recent corporate tax reductions will come in handy for private enterprises to revive the capital expenditure cycle, he said.
As for the ongoing State-run mergers, Kumar, who oversaw the integration of SBI and associate bank mergers, noted that human resources was one of the key challenges to overcome.Meanwhile, FICCI president Sangitha Reddy said the government must infuse `1-2 lakh crore to revive the gloomy economic sentiment. “This is one thing that we industry believes, that notwithstanding any impact it may have on fiscal deficit, the government must find ways to induce at least `1-2 lakh crore into the economy to boost construction and infrastructure once again,” she said.