Government, RBI working in tandem positive for banking sector: Dipan Mehta

In a chat with ET Now, Dipan Mehta, Member, BSE and NSE, shares his views on Banks and NBFC.

ET Now: I was asking you about the RBI norms that got released yesterday which will allow persons with banking experience or NBFCs in general to set up banks as well. What did you make of those because the NBFCs have reacted today?

Dipan Mehta: That also is positive and we have been getting news flow and that come from the RBI. But these are more of long term in nature and they will take some time before they actually start having an effect on the performance of these specific NBFCs. But what we have in place is that, we have a finance minister and RBI governor both who want to make things far better for the financial services sector and to channelise savings into the capital market into financial assets.

So one side whatever is required to be done at the government end is being done and then RBI is also in its own way carrying out a lot of reforms. Be it allowing new bank licenses, the payment banks as they describe it or for that matter what they did as far as infrastructure funding is concerned by providing exemptions or relaxations on SLR, CRR. So both institutions, the government and the RBI, working in tandem and that is very positive per se for the banks.

But my sense is that banks, NBFCs are also doing better because some of the threats which were impacting, likely to impact the economy that being oil prices per se and secondly the monsoon are gradually getting dissolved. Oil prices are back to where they were about few weeks ago or few months ago and we are within reach as far as diesel pricing and diesel subsidy is concerned. That is more or less over and done with and last two-three days monsoon also progressed pretty well. So these are the two indicators which will benefit the domestic economy and once domestic economy starts doing well, then automatically banks are the best sector to benefit from that. So not just RBI and what the budget has offered to NBFCs, but the fact that the threats regarding to monsoon and oil prices has also improved the sentiment within the cyclicals.