Bankers feel there is a possibility that the recovery in non-performing assets (NPA) cycle will be further drawn out following the Supreme Court?s verdict cancelling the allocation of coal blocks.
Arundhati Bhattacharya, chairman of the State Bank of India, said the turning of the NPA cycle could get delayed. ?I am not ruling it out, but we are not pressing the panic buttons right now,? Bhattacharya said at the customary post-policy bankers? press conference on Tuesday. ?We need to be a bit patient and watch where it is.?
Bhattacharya said the government planned to come up with measures for companies affected by the cancellation of captive coal blocks. These were expected by October-end and bankers were waiting to assess the impact these would have on their accounts.
?Meanwhile, we are keeping our options open and keeping a track of all these accounts. We are also trying to engage with the necessary people to tell them what are the issues; we may suggest some solutions,? Bhattacharya explained.
On lending rates, bankers said they remain dependent on credit demand, currently not healthy. Aditya Puri, managing director and CEO of HDFC Bank, said if credit demand picked up, one wouldn?t see lower deposit rates. ?If it does not pick up and there is a lowering of deposit rates, then we can possibly see some reductions on the asset rates,? Puri added.
Latest data from the Reserve Bank of India showed that non-food credit grew by a mere 9.8% for the fortnight ended September 5, compared with the 18.4% growth in the same period last year.
Bankers said there is no credit demand for new projects and that waiting for the new capex cycle and now are looking for growth in their retail books. ?Retail credit has been growing and is stable. Sentiments such as the festival season will add to further demand. As far as working capital goes, it all depends on the momentum coming back into the economy. Finally, the new projects come in when new investments come in,? said Chanda Kochhar, managing director and CEO of ICICI Bank.
Kochhar, also ruled out the possibility of a cut in deposit rates immediately.
?Today, deposits compete with many other financial instruments and a customer has many choices.
You have to keep that in mind as well,? Kochhar reasoned.
