Bankers must push for creating more demand: SBI's Bhattacharya

Key takeaways from SBI chairman's interview to The Financial Express

SBI chairman Arundhati Bhattacharya feels it could take some time before demand for corporate loans pick up. 

However, loan rates are likely to come down if bankers push for creating demand, she told The Financial Express, in an interview on Monday. 

Bhattacharya also said that banks could be wary of cutting deposite rates due to the fear of wasting a franchise, the report added. She places bets on the lender to have a balance sheet growth of Rs 40 lakh crore over the next three years. 

Here are the highlights of what the SBI chairman said during the interview. 

Corporate demand

The demand for corporate loans is very low and we aren’t seeing a pick-up very soon. Maybe, in the second half of the year, as and when we have more projects and triggers — a good monsoon, good harvest and the seventh pay commission — they should create demand. This, in turn, will hopefully push up capacity utilisation and subsequently investments may come back. 

Deposit rates

Actually deposit rates should come down but I don’t see that happening because deposit accretion in the banking system is much lower than what it has been ever. No bank seems willing to lower rates. Despite a disinflationary situation, if you are not getting resources, why should you bring the rates down? 

On fintech players

At the end of the day fintech is a revolution or an evolution and unless you get there you will find it very difficult to keep up. We may not be seeing it so much because the PSBs do not much talk about it but there is a lot of adoption of technology going on. They may not be doing it at the pace one would like to see but it is not true that PSBs have their eyes and ears closed and do not understand what is happening.

SBI mergers

The merger will take the balance sheet to Rs 29 lakh crore and over the next two to three years we are looking at a balance sheet size of Rs 40 lakh crore.

Rural consumption

Loans in the agri area are showing a good uptick. That suggests the old loans are being repaid and fresh ones being taken for the new season. In the previous two years the repayments have been less, bad loans have gone up.