Top bank executives on Thursday attempted to shed the ‘risk-averse’ tag put up on them by the regulator and the government and said that the lenders are keen to lend to viable businesses even in the post-Covid world.

Most bankers who participated in the Business Standard Unlock BFSI 2.0 webinar event held on Thursday felt that they expect better indicators of the economy in the third quarter of the financial year, even as there are visible green shoots in some of the sectors such as automobile and cement.

“It is not about being risk-averse but being prudent. We also have to look at the demand in the system. Though the loan sanctions have increased but the utilisation has gone down. We have been lending to good infrastructure projects so I don’t know why there was a feeling of risk aversion,” Union Bank managing director and chief executive officer Rajkiran Rai G said during a panel discussion of six bankers titled ‘Capital is the key’.

Rai said that the banks were willing to lend to competent projects with “sufficient cash flows” and it was not fair to blame the lenders for being “risk-averse.”

Axis Bank MD and CEO Amitabh Chaudhry had no qualms in saying that the bank was “quite comfortable in adopting a conservative approach towards growth.”

Earlier at the same event, Reserve Bank of India governor Shaktikanta Das gave a word of caution to banks of being “overly risk averse” which, he said, “will be self-defeating.” “Risk prosperity should be aligned to the risk appetite of individual banks,” Das had said.

IDFC First Bank chief V Vaidyanathan showed optimism that the retail loan segment will continue to show robust growth for banks. “When we were trying to estimate the impact of Covid-19, we felt that this is going to be a washout year. But looking at the figures of last few months, if we were estimating a zero growth, then I can say that retail loans can grow 10-15 per cent for us,” Vaidyanathan said. He added that the businesses are running at a capacity of 60 per cent compared to pre-Covid levels and are expected to rise to 90-95 per cent in another six months.

Punjab National Bank MD and CEO S S Mallikarjuna Rao said that he expected the festival season to be a “wonderful opportunity” for some capital-intensive sector, barring tourism, aviation and hospitality, to bounce back. “The third quarter will give us a better sense of how we will go about with restructuring (of loans),” Rao added.

CITI India CEO Ashu Khullar said that the economic situation is still “pretty complicated” as there are demand-side constraints along with obstacles continuing on the supply side. “This is a health crisis and till we overcome it, we will have a little bit of friction,” Khullar added.

On the loan moratorium, IDBI Bank chief executive Rakesh Sharma said that the number of borrowers who have availed for this facility should not be a parameter to examine the books of lenders. “Based on number of moratorium we should not judge the balance sheet of banks. We should look at how securities are backed. We also have to look at the CIBIL score People are withdrawing from moratorium every day,” Sharma said, adding that he expects 4-5 per cent of the bank’s borrowers to go for restructuring of loans.

PNB's Rao sounded out alarm on low savings rate in the view of particularly low inflation rate which has pushed the interest rates down. “It’s a tricky situation…Interest rates cannot be the only factor driving the economy. If savings rate go below 3 per cent, it’s an alarming situation. Banks are driven to offer this rate due to asset liabilities mismatch and it’s not sustainable for country like ours. It would be better if inflation is a bit on the higher side,” Rao added.

Union Bank's Rai hoped that lower savings rate is a “short-term phenomena” as the bank would want to reward savers as “inflation stabilise.”