Confident of growing ahead of the India’s GDP, Dinesh Khara, Chairman of India’s largest bank State Bank of India, said the bank is on course to record 14–15 per cent loan growth in the coming fiscal.
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Speaking exclusively to businessline, he said that growth is a function of GDP and if the nominal GDP growth is around at 7.5 per cent and inflation is pegged at 5.5 per cent, delivering 14–15 per cent growth in FY25 is an achievable target for SBI.
“For a balance sheet of this size and we are already at ₹37-lakh crore, it’s a decent growth. The other aspect which I must highlight is not merely the number but the quality of the number,” said Khara. “As a commercial call of the organisation, we cannot lose sight of quality and we are conscious that if we have to have the best quality pricing has to be competitive, for which we have to raise deposits at reasonable cost”.
Strong sentiments
When asked whether the overall macroeconomic conditions are congenial to support these expectations, SBI Chairman reiterated that India ranks much ahead of other economies in terms of growth possibilities. “If you look at our ability to address supply side issue and if you look at our inflation trajectory, they are all in the positive direction.” Adding that as an economy the kind of initiatives the country has taken particularly in the infrastructure space, and simultaneously ensuring that there is adequate liquidity in the system, Khara is confident that the contributing factors for growth are intact.
What also boosted his overall optimism is the manner in which the country handled the tough period of Covid pandemic. “If you look at around the globe, they’re all struggling with excess liquidity that was pumped in during the pandemic and as compared to that there was a moderation in India. We had just adequate liquidity.”
Khara’s confidence on positive macro-environment also emanates from the initiatives taken for supportive infrastructure which has stepped up the universe of growth in terms of renewable energy, EV batteries and solar energy. Terming these segments as new levers of growth in addition to the traditional segments, the Chairman said: “The macros are well-placed and the environment is very positive. Therefore, when it comes to acceleration (of growth) this confidence plus the macro (factors) will probably be blended together to accelerate growth for a sustainable period.”
Return of private capex
What also plays a major role in bumping up sentiments is the faster pace of loan drawn down by India Inc. “There’s always a lag between the commitment and the actual investment. At our bank, unutilised loans are coming down. Also, there is a pipeline available for us. This clearly means that the commitment is getting converted into sanctions and sanctions are getting converted to utilization”.
However he also added that the private sector today has better visibility of cash flows and “their dependence on dependence on bank borrowings is also lower than what it would have been”.
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When asked about conflicting reports on growth, particularly referring to Goldman Sachs report which called out that ‘the Goldilocks period is over for banks’, with a smile Khara replied, “I believe those who are closer to the object can see it better, as against those from a distance”. Adding that the global brokerage may have its own view, he emphasized that from a distance one could use a prism through which they would like to see things. “From nearer, I believe everything is good”.
“At our bank, unutilised loans are coming down. Also, there is a pipeline available for us. This clearly means that the commitment is getting converted into sanctions and sanctions are getting converted to utilisation” Dinesh Khara,Chairman, State Bank of India