Corporate borrowers have been deleveraging their balance sheets over the past few years and few among them are expected to seek restructuring under the latest scheme, State Bank of India (SBI) chairman Rajnish Kumar said on Thursday. Instead, retail borrowers are more likely to line up to avail of the benefit and SBI has already started receiving requests, he added.
“Currently, for corporates I can say that a lot of deleveraging, resolution, clean-up has already happened and a lot of accounts were dealt with under the existing June 7 circular. As of now there are not many requests and I hope there are not many requests coming forward. There will be some requests for recast from the personal segment and we are readying ourselves for dealing with the volume as far as the P-segment is concerned,” he said, speaking at Unlock BFSI, an event hosted by a business daily.
Kumar identified the hospitality and aviation sectors as the most vulnerable because they have been the worst-hit by the pandemic. While there is some impact in the rest of the sectors, these two sectors along with entertainment, are the worst off.
He also responded to the RBI governor’s observations on the question of risk aversion and reduced appetite for lending among banks. Kumar said that as regulated entities, banks are doing everything in terms of putting appropriate systems in place.
“Definitely, the governor is echoing the sentiment that the banking system is not lending as it was lending earlier years. It is a very common observation which keeps on coming but the fact is that there is a growth and in many areas what is happening is that demand for credit is not very high,” Kumar added.
He further said that bankers have been pointing to supply-side issues in credit delivery as also the depressed levels of investment in the economy. There are few new projects, which need money from banks. As a result, credit growth is languishing at 5-6% levels, as against growth rates in the range of 15-16% in the recent past, he said.
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