The country?s largest lender, the State Bank of India (SBI), has said the RBI decision to award the IDFC a full-fledged banking licence is likely to impact the infrastructure sector, which has been witnessing a slowdown, as the company was a leading an integrated infrastructure finance player.
?We welcome RBI?s decision on banking licence. Only thing is that IDFC is a major player in the infrastructure segment. Now they will need to build their own portfolio. Going forward, I don?t see them playing a big role in infrastructure, which for the sector is not good. We need all the people we can get to fund infrastructure,? SBI chairperson and managing director Arundhati Bhattacharya told reporters on the sidelines of the annual convocation of Indian Institute of Management Calcutta (IIM-C) on Saturday.
IDFC is India’s leading integrated infrastructure finance player providing end to end infrastructure financing and project implementation services since its inception in 1997.
Significantly, the infrastructure finance major said it would reduce its exposure to the infrastructure sector over the next 18 months as it readies to enter the universal banking space.
Bhattacharya said SBI, however, will not raise its exposure to the infra space to fill the ?vacuum? which will be created by IDFC decision to cut exposure in the segment. ?We are not going to jump in to filling that vacuum? she said.
The SBI chief, however, welcomed RBI decision to give licence to microfinance major Bandhan, saying, ?It will help in filling up the gaps in financial inclusion.? On offloading SBI?s bad assets to the asset reconstruction companies (ARCs), Bhattacharya said the bank was in the process of selling off non-performing assets (NPAs) worth around R3,500 crore to R4,000 crore for 2013-14.
?We are selling NPAs between R3,500-4,000 crore,? she said. Earlier, the state-run bank said it would offload stressed loans of around R5,000 crore.
According to the SBI chairperson, the first quarter outlook for the current fiscal would remain sluggish and there would be not much of credit growth.
She said although the cost of funds for banks would go up due to the RBI decision to lower the borrowing limit for them from the overnight facilities, State Bank of India would hold on to the home loan rates. ?Cost of funds will go up, but we are not considering any increase in the home loan rates,” she maintained.
The bank in its recent monetary policy review has kept the repo rate unchanged at 8%, but lowered the borrowing limit for banks from the overnight facility.