Credit offtake may not be as good as expected, says Bhatt
Business Line
Sunday, March 29, 2009
Jamshedpur, March 28 Interest rates will soften further. However credit offtake may not be as good as expected, said Mr O.P. Bhatt, Chairman, State Bank of India, here on Saturday. Speaking on the sidelines of the 53rd Convocation of XLRI, he said : ?There are a lot of indications that interest rates should soften further. How much and when needs to be seen.?
The Asset-Liability Committee of SBI, he said, would take a call on interest rates as and when required. Talking about the various measures taken by the bank to bring down interest rates, Mr Bhatt said, ?We have been taking a series of measures starting October-November and our rates have gone down across the board. In February, we again announced a slew of measures to bring down interest rates,? he pointed out.
Inspite of the lower interest rates, the credit growth this quarter has not been as expected, he said. ?Credit offtake has not been as good as we expected it to be. We do not see the credit demand improving soon,? he added. Mr Bhatt said it was difficult to ascertain whether the slowdown in credit offtake was due to lack of demand or because people were waiting for correction in prices and interest rates.
The growth in credit demand during the next financial year would depend to a great extent on the global economic situation, the timely onset of monsoons and also the new government and its policy stance, he pointed out.
Non-performing assets were on the rise and there has been a stress on asset quality, he said. However, this would not prevent the bank from lending to specific sectors he said on being asked about SBI?s exposure to airline industry. ?There have been strains across sectors such as real estate, textile, steel and we have seen a rise in NPAs. But this will not deter us from lending to these sectors,? he said. There was also a pressure on margins, he added.
Liquidity was adequate and was not a constraint at the moment. The bank, he said was awash with liquidity and does not plan to go for raise capital further.
Sources :: State Bank of India
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