The year-on-year numbers for MSME lending are up. Accounts eligible for restructuring as per the RBI scheme have been restructured.
State Bank of India (SBI) may miss the double-digit credit growth target it had set for FY20, PK Gupta, managing director, retail and digital banking, tells Ankur Mishra in an interview. According to Gupta, the double-digit credit growth in FY20 would be a challenge even as it is picking up marginally. Edited excerpts:
Is SBI going to achieve double-digit credit growth in FY 20? Do you see credit growth pick up from here?
Our working capital utilisation has been poor, but credit growth is picking up marginally. We expect the pick-up in Q4. We had substantial growth last year, so credit growth would be lower this year due to base effect. Therefore, it may be single digit only, double-digit credit growth would be a challenge.
Is there a pick-up in demand?
The overall demand remains muted. However, we are seeing demand coming from the retail segment, especially home loans. There is lot of demand in unsecured personal loans also.
What is the status of lending to MSMEs? Are banks going slow as a measure of caution?
The year-on-year numbers for MSME lending are up. Accounts eligible for restructuring as per the RBI scheme have been restructured. We have been giving additional credit facility to MSMEs. We are also offering discounting of bills for some MSMEs. November and December were better for MSME credit. We hope to see further pick-up in MSME lending in coming months.
Empirical evidence suggests stress in retail segment. The RBI also warned about increased lending to retail segment in its report. How is SBI dealing with it?
We have not seen any elevated stress in retail segment. As a large portion of our portfolio is towards salaried professionals, we don’t have any problem in recovery. We check the credit bureau score before lending. Therefore, the credit culture is actually much better in the retail segment.
How is the liquidity in the system?
The system liquidity is around Rs 2.5 lakh crore to Rs 3 crore every day. There is enough liquidity in the system. On the liability side, there are not much concerns.
SBI has reduced loans linked to external benchmark by 0.25% to 7.9%. At what rate a customer can avail home loan?
Customers with a good credit history and rating can avail home loan at 7.9% per annum only. SBI does assessment based on salaried, non salaried and credit score. So a customer with best credit score will get loans at 7.9% all inclusive.
It is only 3 months that the external benchmark product has been launched. Are customers shifting to new product?
We have not seen huge rush for customers to avail external benchmark rate product till now. As the rates are reduced, we are expecting people to shift now. However, it will remain the choice of customers to migrate or not. All new loans will be linked to external benchmark.
How do you see lending rate from here? Do you believe rates to come down further?
It looks like that rate cut may not happen in next policy as the RBI is watching inflation. As of now, these are best rates for customers to avail. If you look back at past 10 years, home loan rates are better than ‘teaser loan’ regime where rates were fixed for only first two years. In the current economic scenario, these are best rates.