HDFC chief sees green shoots all around, investment cycle reviving

Noted banker and HDFC chairman Deepak Parekh has said the economy has bottomed out and that he sees the beginning of private investment coming in going forward.
 

Finance minister Arun Jaitley had said in the Budget that the economy was on course to achieve high growth north of 8 per cent though the economic survey projected on 7.7.5 per cent while the Reserve Bank has pegged it even lower for FY19.

"The worst is over. We had major transformative reforms. Any economy will suffer when you have GST, demonetisation, real estate regulator or IBC. Such reforms do create short-term pains but in medium- to long-term, there will be gains. I am very bullish and optimistic now. I see companies willing to invest and put in money," Parekh said on the sidelines of Maharashtra investor summit here on Monday.

The economic survey has pegged growth at 7-7.5 per cent for FY19. The economy had moderated to 5.7 per cent, the lowest in the three years, in the first quarter of the current fiscal year but recovered to 6.3 per cent in second quarter.

The government is latching onto a 6.9-7 per cent GDP growth this fiscal, which it may attain given the change in the GDP base year to 2017-18.
 

Noting that there is under-penetration of financial services in the country, Parekh said "in every sector, be it consumer, auto or mortage loans or insurance, penetration is all in single-digit to GDP. Across developing economies, the average number is 20-30 per cent."

Raising concerns on the high real estate prices in Mumbai, he said people are now forced to move to Navi Mumbai because of the high property prices in the island city.
 

"Navi Mumbai is the new growth area now. With the new airport and other infra development, I am very encouraged by that," he said.

Parekh said with shortage of housing in Maharashtra, he sees a great future for affordable housing in the state. Talking about the Rs 114-billion PNB scam, Parekh said such frauds can happen only when there is collusion between an insider/s and outsider/s.

“There was collusion between PNB staff and the client. A customer cannot do frauds without connivance and cooperation of employees of the bank,” Parekh said.

The fraudulent transactions were carried by the diamond jewellers Nirav Modi and his uncle Mehul Choksi and their companies by acquiring fraudulent letters of undertaking (LoUs) from PNB's Brady House branch at Horniman Circle are of south Mumbai to secure overseas credit from other lenders.