Saturday, October 1, 2022

There is enough cash available in the banking system: SBI Chairman

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New Delhi: SBI Chairman Rajnish Kumar has said that there is enough cash available in the banking system and it is now for the industry to take advantage of this. Speaking on the second day of FICCI’s 92nd Annual Convention on Saturday, Kumar said that India’s target of $5 trillion cannot be achieved unless there is an investment in the economy.

“Today there is no problem with liquidity or availability of the funds with the banking system. Currently, three sectors, solar, city gas projects, and roads, are seeing demand for credit,” Kumar said, adding that the banking system today is more cautious than what it used to be.

SBI Chairman says method of lending needs to change

On the issue of loan monitoring, Kumar said, “The method of lending itself would need to undergo a change. Asset-based lending will continue to work for term loans but for working capital, we will have to move to cash flow-based lending.”

Commenting on the issue of interest rates, Kumar said that in the banking system dependence for borrowing in India is largely depositors. “We can’t lower the interest rates without lowering the interest rate for depositors and there is a threshold below which we cannot reduce the interest rate for deposits,” added Kumar.

‘Digitisation is the new mantra’

Sandip Somany, President, FICCI, said that the global economy is going through a phase of synchronised slowdown and more than 90 percent of the world will see a reduction in growth in the year 2019. “To boost consumption, support has been given to NBFCs and HFCs to improve retail credit, payments that have been held up in the government system are being expedited,” said Somany.

“The banking system itself is changing at an unprecedented pace given the advent of technology. Digitisation is the new mantra and data is the new source of revenue. Digital financial inclusion is now in vogue and the partnerships being worked out between banks and fintechs are yielding some very good results. The underbanked and the unbanked are now being served through this collaborative approach and it will be interesting to see how this digital banking trend moves in the times ahead,” added Somany.
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