Business

Use working capital limits: SBI

Chairman of the State Bank of India, Rajnish Kumar speaking at the first edition of the FICCI Dialogue in Hyderabad on Saturday.

Chairman of the State Bank of India, Rajnish Kumar speaking at the first edition of the FICCI Dialogue in Hyderabad on Saturday.   | Photo Credit: Nagara Gopal

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India can become $5 trillion economy, says chairman Kumar

State Bank of India (SBI) Chairman Rajnish Kumar on Saturday urged corporates to utilise working capital limits as well as the facility under which the country’s largest lender extended finance against receivables due from government departments.

“I am absolutely comfortable in discounting receivables or extending receivables finance… ready to give up to 360 days [credit],” he said, adding the due, however, should not be disputed by the government.

In the past, there had been instances of such receivables shown in the balance sheet but the government department saying it did not owe any money, Mr. Kumar told a FICCI event. The SBI head sought to underscore the need for corporates to work towards building trust.

“Traditionally lending is always on trust… but last few years have not been good because of breach of trust,” he said, even while pointing out to the significance of encouraging entrepreneurship and accepting business failures. The problem comes when the failure is not necessarily on account of business circumstances.

“When an enterprise closes down, its employees suffer… but we find no impacton the promoter. Their lifestyle remains unchanged, we cannot ignore that dimension,” Mr. Kumar said.

On the need for better coordination among banks with regard to consortium lending, he said a committee of six bankers — two foreign and an equal number of private and public sector banks — of the Indian Banks’ Association (IBA) has been formed.  It will submit its report in three months to usher in faster decision making, transparency and all bankers agreeing to share information on lending based on cash flows. On India’s plan to become a $5 trillion economy, Mr. Kumar said it was achievable, without commenting on the five-year time frame set to achieve the same. The growth will come on the back of private sector revival and not just on government investment, he added.

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Printable version | Jan 27, 2020 2:02:15 AM | https://www.thehindu.com/business/5-trillion-economy-achievable-timeframe-uncertain-sbi-chief/article30479644.ece

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