State Bank of India chairman Arundhati Bhattacharya on Monday said non-performing assets (NPAs) in banks will reduce as demand returns in the economy and capital utilisation by industrial units increases.
During an inauguration of the bank’s IFSC Banking Unit (IBU) located at the International Financial Services Centre (IFSC) at Gujarat International Finance Tec (GIFT) City’s Special Economic Zone (SEZ) in Gandhinagar, Bhattacharya said that capital utilisation by manufacturing units and even power plants was currently “sub-optimal” at around 65% and that NPAs would start coming down when the utilisation rates rose to 85%. The facility will be developed with an investment of R200 crore.
Gujarat chief minister Vijay Rupani was present on the occasion of the SBI’s 199th international office’s inauguration. SBI proposes to set up commercial and residential facilities within two lakh square feet, at an investment of R200 crore. The space will include a commercial tower of 14 floors, 180 residential apartments and seven bungalows for the bank’s top management, and is expected to be ready for use by 2019.
Noting that employees would still be commuting from Ahmedabad, Bhattacharya requested the state government to come up with some kind of a rapid transport facility quickly.
Speaking to the media after the ceremony, Bhattacharya said, “A lot of operations such as arbitration over disputes or other financial operations involving Indian corporates are happening out of financial centres in Singapore and Dubai by people of Indian origin. The Indian economy is expected to grow exponentially by 2025 or 2050. If global capital has to come to India, it is proper for India to have such centres. There is scope for more than one IFSC in the country as well.”
The IBU will initially begin with operations such as giving trade credit to Indian corporates and other such loans for importers and exporters in foreign currency. Bhattacharya said they would subsequently look at other operations such as derivative transactions, factoring and forfeiting.