The Reserve Bank of India’s rigorous supervision and monitoring is helping keep India banks healthy, according to Sanjiv Bajaj, president of the Confederation of Indian Industry and CMD of Bajaj Finserv.
“Our own growth as an economy may get affected if external factors get worse, but our banking system is solid and stable,” he said, pointing out to how RBI as a seasoned, mature and conservative regulator had helped weather many storms since the 2008 global financial crisis.
“[Even] now, with the central bank’s rigorous supervision and monitoring Indian banks remain very healthy and that is a show of strength for our economy at this point of time,” he said to queries around shuttering of a few banks in the U.S. and the financial crisis in Europe.
Mr. Bajaj, who was speaking at a summit coinciding with the annual regional meeting of CII-SR, in Hyderabad on March 17, said the recent developments abroad are unlikely to impact credit availability in the country. “As an economy, India is growing at 7% [and] credit availability for good companies in not a problem, whether a start-up or otherwise. This may be an issue right now overseas. But these are for a small or short period of time. Eventually, there is enough capital available globally for good ideas and good businesses,” he said.
He cautioned traditional entities such as older banks and insurers from rushing to invest in fintech start-ups as at times their “valuation doesn’t make sense”. The latest crisis is a case of difference between need and greed.
“Unfortunately, like everybody else the banking system gets greedy... solidity of banks has to be predominant given they are integral to provide support to any economy,” he said, adding how banks ought to factor in the risks before looking at growth or returns.
To a query on RBI raising benchmark rates, he said while there was a need in last three years for coordination among central banks world over that period is possibly over now. Each country has to face its own opportunities and challenges. With growth in India today at a reasonable rate “we have to now look at what is required to support our economy and in that context believe this is timely for central bank to pause on the interest rate cycle.”
Going forward India should not merely produce what has been innovated by someone else but switch to innovating for the world, Mr. Bajaj told the summit on ‘South India@100: Going beyond boundaries’. CII-SR chairperson Suchitra K. Ella, CII Director general Chandrajit Banerjee were among those who addressed the session.
Published - March 17, 2023 03:20 pm IST