Business

Use working capital limits: SBI

Chairman of the State Bank of India, Rajnish Kumar along with Secretary General, Dilip Chenoy (left), Chairman, FICCI Telangana State Council T Muralidharan, President FICCI Dr Sangita Reddy, Interior Designer, Chairperson of FICCI Ladies Organisation, Sona Chatwani and Co-Chairman, FICCI Telangana State Council, A Murali Krishna Reddy (right) at the first edition of the FICCI Dialogue for Actionable Insights hosted by the FICCI Telangana State Council with the theme Outlook on the Indian Economy in Hyderabad on Saturday

Chairman of the State Bank of India, Rajnish Kumar along with Secretary General, Dilip Chenoy (left), Chairman, FICCI Telangana State Council T Muralidharan, President FICCI Dr Sangita Reddy, Interior Designer, Chairperson of FICCI Ladies Organisation, Sona Chatwani and Co-Chairman, FICCI Telangana State Council, A Murali Krishna Reddy (right) at the first edition of the FICCI Dialogue for Actionable Insights hosted by the FICCI Telangana State Council with the theme Outlook on the Indian Economy 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 FICCI Dialogue for Actionable Insights programme organised here by the industry body’s Telangana State Council.

The SBI head, who responded to various queries, including one on how credit flow can be better, 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 impact on the promoter. Their lifestyle remains unchanged, we cannot ignore that dimension,” Mr. Kumar said. Calling for responsible promoter behaviour, he said they should act as a trustee.

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.

To query on threat to traditional banking system from fintech entities, he said while competition is always good from consumers perspective, for “public sector banks it is a question of survival. We have to mend our ways… the quality of governance, decision making, adoption of new technology, skill upgradation, cultural change is the most difficult but it is not impossible. It will be a combination of actions on many front… if not, definitely it will be an existential crisis.”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 1:20:15 AM | https://www.thehindu.com/business/use-working-capital-limits-sbi/article30480654.ece

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