The effects of slowdown is gradually waning: SBI chief

The effects of slowdown in various pockets of the consumption economy which impacted credit growth in domestic banks is gradually waning as consumers are back to spending with the onset of festival season, said State Bank of India chairman Rajnish Kumar.
“We have seen that traditionally in the festive period between September and April the demand for credit peaks. There is a lot of hope ahead of this festival season” Kumar told reporters. “Retail credit is growing slowly, and the loan slowdown is more on the corporate side. Based on preliminary data the footfall at most shopping centres is back and it will soon be reflected in growth data as well. The demand for retail credit has picked up.”

He was speaking at the launch of SBI’s new debit card financing programme where the lender announced tie-ups with 100 top consumer and electronic brands to give pre-approved financing options to customers.

Kumar also said that the problem of Non-performing assets (NPAs) has been overstated and the situation isn’t as bad as being portrayed and on the contrary it is improving. The Gross NPA ratio of state-run banks fell to 10.1% by December 2018 from 11.5% in March 2018. SBI will announce their second-quarter earnings result later this month on 25th October.

The lender over the past month has been conducting customer outreach programmes in the way of loan melas to speed up the process of loan disbursement. These measures have been aimed at reviving the credit demand in the economy, which has seen a slowdown since April due to weakening consumer confidence.

Cost of funding could also ease with the Reserve Bank of India reducing the repo rate or cost at which banks acquire credit from the central bank by 25 basis points last week taking the total since February to 135 basis points. A basis point is 0.01 percentage point.

“We were the first to link external benchmark to floating interest rates on our housing loans,” said Kumar. “We have since also linked small and micro enterprises loans and retail loans to these externally linked floating rates which are decided on a quarterly basis.”