Business

Banking sector NPA situation to improve by fiscal-end: SBI chairman

Banks have be careful in lending to telcos as the probability of default is very high, says Rajnish Kumar.

Banks have be careful in lending to telcos as the probability of default is very high, says Rajnish Kumar.   | Photo Credit: Paul Noronha

Infrastructure and consumer lending offer opportunities, says Chairman Kumar.

SBI Chairman Rajnish Kumar on Saturday said most banks will be in a ‘good position’ with respect to stressed assets by March and that there is no dearth of liquidity in the system for lending.

He added that there were opportunities to lend in sectors such as infrastructure and consumer lending, as there is not much of a decline in demand from consumers.

“By March 31, most of the banks will be in a good position with respect to stressed assets,” Mr. Kumar said at the 92nd Annual Convention of industry chamber FICCI here.

On transmission of monetary policy, he said the banks cannot lower rates beyond a threshold due to asset liability mismatch issues.

Mr. Kumar said that there was no shortage of capital in the system, but that the corporates were not borrowing enough and not utilising their capacities well.

On lending to the telecom sector for the next round of spectrum auctions, he said, “For us, lending to the telecom sector for spectrum is completely unsecured.

‘Telco loans unsecured’

“On paper, it is secured as the auction is to be done by the government, but practically, it is totally unsecured.”

“So, in such circumstances, banks will have to evaluate carefully before lending to the sector as the probability of default is very high,” Mr. Kumar said.

Why you should pay for quality journalism - Click to know more

Recommended for you
This article is closed for comments.
Please Email the Editor

Printable version | Feb 20, 2020 7:47:32 AM | https://www.thehindu.com/business/banking-sector-npa-situation-to-improve-by-fiscal-end-sbi-chairman/article30368763.ece

Next Story