Mr. Rajnish Kumar Chairman of State Bank of India said in an interview, “The government and corporates have to open up their wallets to invest, and their actions should go hand-in-hand for a quick economy recovery since the vital middle class remains cautious amid ongoing unlocking of the economy,” and also said that they must invest in the infrastructure, that might step up this sector.
He further talked about the fact that continuing loan moratorium facility has achieved its short-lived purpose and now Reserve Bank of India should look upon the matter that how it should provide the banks with restructuring assistance so they could further provide the loan recast facility to the qualified persons and organizations.
SBI Chairman said to the interviewer, “It’s important that expenditure be stepped up by the government and corporates.” “The money which is put in the system will give a fillip to consumption demand and infrastructure investment. The money put in the hands of people through direct benefit transfers is helping boost rural demand. The middle class also plays a pivotal role, and for that segment to spend, the fear of Covid-19 has to go away.”
Many bankers and industries are searching for ways to revive the cash-strapped businesses that are affected by the ongoing lockdown for five months in one way or another. A growing consensus is also building up that there should be loan restructuring and flexible loan repayments schemes should be introduced instead of a loan moratorium scheme.
Mr. Kumar further said, “We don’t need an across-the-board moratorium now. We (are) saying that the future course of action should be left to the bank and the borrower,” and “The current dispensation is that the account will be downgraded to a sub-standard asset and the bank will have to provide (for) 15%. What the RBI can do is if the bank is satisfied with the intent of the borrower and normalization in cash flows, it can give some relief.”
Many economists forecasted that GDP contraction in this fiscal year would be around 10% as economic activities are getting shrunk. Rajnish Kumar suggested that the situation is improving, he said, “In June, there has been a fairly good recovery and we saw that many industries have come back to 75-80% of their capacity utilization levels. But there has been continued supply chain disruption because of the local lockdowns.” “In many cases, it so happens that a unit may be sourcing parts from an area where there is a lockdown, and that is having an impact. Overall, I believe we are in a much better position than where we were in April and May,” he ended his interview on this statement.
With Warm Regards,
CL Bureau.
