But banks are more cautious on loans

There is enough cash available in the banking system and its now for the industry to take advantage of this, said SBI Chairman Rajnish Kumar.

Speaking at FICCI’s 92nd Annual Convention on 21 Dec 2019, Kumar said “Today, there is no problem of liquidity or availability of the funds with the banking system. Currently three sectors, solar, city gas projects and roads, are seeing demand for credit.”

He also added that banking system today is more cautious than what it used to be.

On the issue of loan monitoring, Kumar said “The method of lending itself would need to undergo a change. Asset based lending will continue to work for term loans but for working capital, we will have to move to cash flow-based lending.”

Commenting on the issue of interest rates, Kumar said that in banking system dependence for borrowing in India is largely depositors. “We can’t lower the interest rates without lowering the interest rate for depositors and there is a threshold below which we cannot reduce the interest rate for deposits?”

“To boost consumption, support has been given to NBFCs and HFCs to improve retail credit, payments that have been held up in the government system are being expedited,” observed FICCI President Sandip Somany.

“The banking system itself is changing at an unprecedented pace given the advent of technology. Digitisation is the new mantra and data is the new source of revenue.

“Digital financial inclusion is now in vogue and the partnerships being worked out between banks and fintechs are yielding some very good results.

“The underbanked and the unbanked are now being served through this collaborative approach and it will be interesting to see how this digital banking trend moves in the times ahead,” Somany said.

Expressing confidence, FICCI President-elect Dr Sangita Reddy hoped that a stronger banking system will emerge from a stronger industry and they both share a symbiotic relationship. fiinews.com