Adequate Mitigants Should Be In Place For Unsecured Credit, Says SBI Chairman
There is a possibility of some tightening in terms of exposures to be taken in the NBFC space, Khara said.
There should be adequate mitigation measures in place along with effective collection mechanisms to make sure that unsecured credit doesn't become a problem for the system, according to State Bank of India Chairman Dinesh Kumar Khara.
"A lot of unsecured lending happens in the NBFC space," Khara told BQ Prime after RBI Governor Shaktikanta Das raised concerns about "very high growth" in unsecured personal loans by banks and NBFCs while presenting the policy statement.
"Since NBFCs are under the regulatory oversight of the RBI, to that extent, it also concerns the banking system," he said. "There is a possibility of some tightening in terms of exposures to be taken."
The MPC's decision to keep the repo rate unchanged at 6.50% was expected as the central bank was also closely watching the inflation trajectory, Khara said.
In terms of a trend in growth in advances and other lending activities, Khara said that there is some demand from private corporates. This is also coming from infra-related sectors, he said.
Even the retail opportunities are there, and they are important as they function as an important growth driver for the banking industry, he said.
Recently, several banks released their Q2 provisional figures, and an overview of the earnings showed strong growth in both advances and deposits. The growth in deposits continues despite the CASA ratio falling.
The government, on Thursday, extended the tenure of SBI Chairman by 10 months, until August 2024.
"...the Central Government hereby extends the term of office of Shri Dinesh Kumar Khara, Chairman, State Bank of India, beyond 06.10.2023 till he attains the age of 63 years, or until further orders, whichever is earlier," according to an exchange filing.
Responding to a question on further plans for SBI, Khara said that the bank plans to leverage analytics more. The database would further be used for risk management practices, social awareness, and improving efficiency parameters, he said.
