Budget 2019: Additional liquidity measures from RBI will help NBFCs, says SBI’s Rajnish Kumar

In an interview with CNBC-TV18, Rajnish Kumar, Chairman of State Bank of India (SBI), shared his views on Union Budget and the RBI’s announcement of additional liquidity to banks.

On the RBI announcement, Kumar said, “These are the two incentives today - one was in the budget where the government said that 10 percent first loan loss default guarantee in respect of pool purchases and coupled with the liquidity - of course, I have not gone into the details because it has just come now but definitely these are the twin measures which will help inflow of credit to the NBFC sector.”

“It is a very helpful measure in my view and particularly even some of the private sector banks which have very high credit-deposit ratio and were needing liquidity support so I think it is a good move to give this assurance to the banks,” he added.

Talking about bank capitalization from the government, he said, “As far as SBI is concerned we are not looking for any capital infusion from the government. We got Rs 8,800 crore two years back and after that we haven’t felt any need for further capital from the government.”

“However, there are still 5 prompt corrective action (PCA) banks, the government and RBI’s effort would be that these banks come out of the PCA framework and Rs 70,000 crore has sufficient cushion for all the public sector banks, other than SBI, to use part of the money for meeting their regulatory capital requirements and rest of the money for their credit growth,” added Kumar.

“Last year the domestic credit growth was in the range of about 13.5 percent and this year the demand cycle which is now expected to pick-up once that happens we can expect a similar credit growth,” he further added..