Recapitalisation good for PSU banks; it will increase competition for credit: Edelweiss

Rashesh Shah

Chairman & CEO | Edelweiss Financial Services

• Recapitalisation good for PSU banks; it will increase competition for credit: Edelweiss

• Focus on organic growth; bullish on SMEs, retail credit: Rashesh Shah of Edelweiss

• Expect 15-20% credit growth for NBFCs in next 8-10 years: Rashesh Shah

The centre earlier this week approved Rs 2.11 lakh crore bank recapitalisation plan. The scheme includes infusion of Rs 1.35 lakh crore via bank recapitalisation bonds and Rs 76,000 crore from budgetary support and market loans.

In an interview to CNBC-TV18, Rashesh Shah, Chairman and CEO of Edelweiss Financial Services discussed how does the government's capital infusion plans impact the non-banking financial companies (NBFC) universe.

NBFCs and private banks have been doing well for last about 25 years. There are markets for all of this. This recapitalisation plan is good for the economy as a whole and I would believe that once the economy as a whole starts doing well, there will be opportunity for everybody, he said.

Competition for credit will increase because private players did not face as much competition from public sector undertaking (PSU) banks till now, he added.

He also expects the economic recovery to help expanding the overall credit pulling the economy.

Economy like India needs 17-18 percent credit growth for normal functioning, said Shah.

Will see aggressive provisioning in PSU banks for the next 18 months, he further mentioned.

I do expect a lot more momentum on bank provisioning and resolving the bad debt situation, which should help corporate activity in India, Shah said.