The Reserve Bank of India’s (RBI) Monetary Policy Committee in its February meeting kept repo rates unchanged, but on display was the gamut of liquidity tools. In fact, many have presented the argument that the RBI presented a rate cut without actually cutting rates. Rajnish Kumar, chairman of the State Bank of India, in an interview with CNBC-TV18 said that there will be a pick up in demand in the corporate sector.

“There are couple of innovations this time in the monetary policy. One is long term repo (LTRO), one year and three year. Second is about lending to auto, MSME

About the non-performing assets (NPAs) in Micro Units Development and Refinance Agency

"Earlier there was a higher NPA but three months back for loans upto Rs 50,000 and for now loans up to Rs 1,00,000, SBI has done end-to-end digitization. Although, it is early because there is a 3-months moratorium built in, we are watching the portfolio. But early signs are very encouraging that the revised system that we have put into SBI for e-mudra loans, which is a completely digitized process, it will improve the quality of lending through e-mudra loans.”

On the matter of agriculture loan waivers announced by various state governments, Kumar said that the SBI has requested the Reserve Bank of India for clarification on its guidelines.

“We have requested RBI that the guidelines can be clearer because there are some confusions around the instructions. So, we are hoping there will be more clarity on the guidelines. Otherwise, in certain states the recovery record at the renewal of these loans have been impacted.

"Wherever there is a debt-waiver announcement, the quality of the agriculture portfolio deteriorates. There are statistics to prove that point. So, that is the impact that we have felt.”

Kumar expressed hope for a pick up in demand from the corporate sector. “We are hoping that there are lot of sanctions, lot of disbursements in the pipeline but on the corporate side, utilisation of working capital as well as the sanction remains.

"There is some time left but I am very confident — you would say four months ago also you were very confident — but there will be pick-up in demand from the corporate sector and once the demand picks up then year-on-year growth numbers will start looking much better than what they are currently.”

First Published:Feb 10, 2020 12:20 PM IST