It’s still too early to predict the true impact of demonetisation but the numbers in the quarter ending March 2017 may reflect some stress, State Bank of India Ltd. (SBI) Chairman Arundhati Bhattacharya has said.
The top boss at the country’s largest public sector lender told BloombergQuint’s Menaka Doshi, on the sidelines of the 47th World Economic Forum at Davos, that such “things (impact of cash crunch) come into banks with a lag”.
“That’s the reason why we are not seeing any of these things reflecting on the bank’s books yet. We do expect that the March quarter will see some amount of stress,” Bhattacharya said.
People have come to us seeking an extension in their working capital loans, because liquidity has dried up. We have already made that available wherever possible. We are hoping that it will have an impact, but we need to be watchful before we can assess the situation.Arundhati Bhattacharya, Chairman, SBI
The SBI chief doesn’t think bad debt stress has gone up sharply, but cautions that “we have to be watchful of the MSME sector”.
Bhattacharya says her own assessment is that the total amount of currency in circulation is around Rs 10 lakh crore and cash situation would be normal by February-end.
She said cap on withdrawals will be eased at faster intervals as more currency comes into the system. But digital payments may dip as the caps on withdrawals are relaxed, she said.
SBI chairman said loan inquiries are slowly reverting to normal but “won’t say it has exceeded the levels seen in October”.
On her expectations from the Union Budget, Bhattacharya said the government needs to give a “fillip to consumption and investment, so for that if they stay at 3.5 percent (fiscal deficit) the sky will not fall”.
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