Credit demand subdued, economy needs stimulus: SBI chairman

KOLKATA: State Bank of India (SBI) chairman Rajnish Kumar on Sunday said credit demand remains subdued and there is a need for stimulus in the economy.

Though lack of credit demand exists in the economy, there is no supply-side constraint as public sector banks are more or less well-capitalised, he said.

"Demand for credit in the economy is subdued. There is a need for stimulus in the economy", Kumar told reporters here.

Kumar hoped that the monsoon will have a positive impact. Increased spending by the government and the upcoming festival season would boost demand, Kumar added. SBI is expects to achieve a credit growth of 12% to 14% this fiscal. The bank's credit growth was 14% in the last fiscal, he said.



The lender's loan portfolio stands at around Rs 23 lakh crore, he said, adding the bank has enough liquidity to deploy. "There is a need for demand of corporate credit," he said. The bank's retail credit of total advances is 57% while the corporate lending accounts for the rest, he said adding the ratio is "not going to change in a significant way".

Expressing concern of NPAs arising out of the agriculture credit, Kumar said, "There is a need to tackle farm credit. High NPAs in agriculture is an issue, though it is not by intent but by capability." He said the flow of credit to the agriculture sector gets impacted due to debt waiver schemes.

Meanwhile, in order to help the auto sector tide over stress, SBI has extended the credit period of automobile dealers that are facing demand slowdown and inventory build up.



"The bank is extending credit repayment period on case to case basis," SBI MD (retail & digital banking) P K Gupta told reporters here on Sunday.

Normally the credit period is of 60 days but the bank has extended the same to 75 days in some cases or 90 days in others, he added.