SBI Chairman Says Companies Risk Averse
According to State Bank of India (SBI) chairman Rajnish Kumar the banks are flush with funds but corporates are not coming forward to borrow. India Inc. will need to overcome risk aversion and start investing if the economy has to pick up, he asserted.
Brushing off criticism that banks have been parking ₹7 trillion with the Reserve Bank of India (RBI), Kumar clarified that there was no correlation between this and risk aversion among lenders. SBI, for instance, received as much as ₹2 trillion worth deposits in April and had to lend to the RBI under the reverse repo window, as there were not many avenues for lending.
Duting hois address to CII, Kumar said corporates should look at opportunities for investment, and should not wait for the government to further support the industry. Kumar added that corporate investments have not picked up despite the government’s effort to open up new sectors and reduce corporate tax rate to 22% last year.
Kumar added that while there was uncertainty around the future, it was not a doomsday prediction when it comes to the potential non-performing assets (NPA) in the system. It depends on each bank’s lending practices and risk assessment that will determine the NPA status. India’s banks are currently saddled with bad loans of more than ₹9.5 trillion, according to RBI data.