#SBI Chairman Dinesh Khara at World Economic Forum 2024 in Davos. #WEF #NDTVProfitLive
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00:00 about their view of higher for longer interest rates in a year when rates would come off
00:06 and a clutch of them including the global chairman of ABB, IKEA and some others said
00:10 that maybe rates may not come down as quickly as the street anticipates. I would love to understand from you
00:14 both from a global context and the Indian context. What's your view on rates?
00:18 Well as far as India is concerned I would say that the Reserve Bank of India decoupled itself quite some time back.
00:26 And here the consideration is primarily the inflation. And what we are observing is that inflation did see less than 5% in the month of November.
00:37 Now it was 5.5. So, I think MPC is very closely watching the inflation trajectory and based upon that there would be the likelihood of the interest rate cuts.
00:47 And even my expectation is that maybe towards the third quarter of the next financial year 24-25 we might get to see some kind of interest rate cuts.
00:59 Okay. What about the global picture Mr. Khara? I mean any thoughts there?
01:03 Well as far as the global scenario is concerned I would say that the volatility as far as the inflation is concerned is quite high.
01:11 And in many of the geographies it is also contributed by some of the supply side factors. So, I think the economies are quite alive to this situation
01:22 and they are trying to address those aberrations and which will eventually help them in addressing the inflation concerns.
01:29 And the Fed has already gone on the call that they intend to cut at least, at least have three rate cuts in the next financial year.
01:37 So, in this calendar year this is what they are assuming. So, I think maybe there also it would be probably we will get to see somewhere in the month of October, November type of
01:46 those are the timings which we expect that we should have some interest rate cuts at least in the US.
01:55 Okay. So, bunched up in the second half if you will not necessarily the first half on both aspects. Okay.
02:00 The second aspect is about growth. I mean everybody talks about India as being the OSS of growth primarily also because it seems that in a fragmented world
02:09 there are very few areas which will actually be able to show strong growth. Your sense in the conversations that you have had here and even otherwise?
02:16 No, see if you look at the structural aspect of the Indian economy we are more internally focused.
02:23 It's more of a domestic economy which is of significance or maybe of a significant proportion of the total GDP.
02:32 So, I think that is one of the reasons why we get, we are quite insulated as far as the rest of the globe is concerned.
02:39 I am not saying that we are totally decoupled. Of course. But yes, of course, we have a much larger proportion of the domestic demand
02:47 which actually guides the trajectory of the GDP in the country. So, having said that we have got a growing middle class population
02:54 who have got aspiration, ambitions and also there is enough demand which is seen in the domestic economy.
03:01 So, I think to that extent the kind of growth trajectory which we have seen in the till now when the rest of the globe is not doing all that well.
03:11 We hope that we will continue to have this kind of a growth going forward and apart from that the kind of focus which we have for infrastructure creation
03:20 which has got a significant multiplier effect too. So, that is the other area which will also propel the growth.
03:26 The third aspect which I must highlight is essentially relating to the focus on the renewables, focus on EVs, batteries and battery storage.
03:36 So, these are the newer levers of growth which you have seen and also this will also add to the growth momentum in the country.
03:45 So, would you reckon that even if the global growth doesn't pick up and a few people anticipate that maybe it will be back ended in this current calendar
03:52 that the Indian growth engine chugging along the way it is could bring that elusive private capex in front and centre in calendar year 24?
04:04 Well, if you look at as far as the private capital which is being talked about quite a lot, I would also like to highlight some of the data points.
04:15 As for the CMI data in the year 22, financial year 21-22, there was a commitment of 35 trillion Indian rupees.
04:24 Even in the current financial year 23-24 also in the first quarter we have already seen the commitment of 20 trillion.
04:36 So, this is a very clear reflection that the private entrepreneurs are evaluating the investment decisions.
04:45 Part of this investment at times is also met from their cash accruals in the balance sheet.
04:54 And also when it comes to the debt which they are raising, there is always a lag effect particularly when it comes to the capacity addition.
05:03 So, it gets spread over a period of time. So, I would say that though it is being talked about and I hope that the way the commitments have been made
05:14 that itself is a reflection that there is enough confidence. It could be a matter of time when we will actually get to see that
05:21 on paper also in terms of the debt which they are raising from the market or from the banking system.
05:27 Actually that was going to be my next question. A lot of talk about whether banks are the preferred modes of financing or is it internal accruals.
05:34 Is it because the numbers are relatively smaller right now that the bank numbers are not showing and will they come to the fore soon?
05:40 I tend to believe that and actually speaking when we look at our pipeline for the corporate credit or the project finance,
05:51 we get to see decent traction and that itself is a reflection that the corporates are looking at borrowing from the banking system.
06:02 And once we sanction the loan and the availment actually depends upon the stage of development.
06:08 So, that is the reason why it is all staggered over a period of time.
06:14 But does it kind of show up in the way numbers or the street would love to see the numbers sometime in calendar year 2014?
06:22 No, even in the last quarter itself when it comes to our corporate book we grew about 7%.
06:28 So, I hope to see better growth in the days to come as far as the corporate book is also concerned.
06:35 A word on the retail book, I mean a lot of caution and rightfully so sounded off by the central bank as well.
06:41 Do you reckon for you or for the street at large does this bring about a heavy slowdown in unsecured lending and loan growth on that aspect?
06:53 I would say not for State Bank of India at least because when it comes to our unsecured book which is actually almost equal
07:03 or if not equal at least better than the secured book also because we are lending to our existing customers only
07:10 and those who are maintaining their salary accounts. And our ticket sales are also on the higher side.
07:16 And when we look at our gross NPA and the way this book is behaving it is perhaps doing pretty well.
07:22 Where our gross NPA as far as the retail is concerned is somewhere around 0.60%.
07:28 So, I would say that it is one of the best book as far as the retail space is concerned.
07:34 So, for us it is not a challenge at all. But yes of course when it comes to and we are growing well also.
07:39 We are about 16-17% kind of a growth we are seeing in this book also.
07:43 But yes of course at the system level the unsecured had started growing at a very fast pace of about 30%.
07:52 And that was the reason why perhaps the Reserve Bank of India thought in terms of applying breaks.
07:58 And they increased the risk weights and also have sort of, in fact they were having a concern relating to the lower ticket sales
08:06 which was about 50,000 or less than 50,000. So, our book is very very different in terms of colour and complexion.
08:13 But for the rest of the street you believe a marked slowdown?
08:16 I would say that maybe there could be some slowdown as far as the NBFC is loaning to the unsecured credit is concerned.
08:26 I have one final piece and that is due to a couple of comments that the way we read it seems to be that the large private banks are saying that
08:34 PSBs are being super competitive on this corporate lending piece and could there be mispricing concerns or thereabouts.
08:46 Now I don't know if you got a chance to see any of some of those comments but I would love to hear your views if you have any on this.
08:52 No, I think it is a decision which is taken at the management level and the board level of each of the bank.
08:59 And they have to price the risk according to their risk appetite and I assume that due considerations are there for each of the bank.
09:09 I would not be in a position to comment at a broad brush level relating to the pricing which is being done by various other public sector banks.
09:18 But as far as State Bank of India is concerned we are quite mindful in terms of we should have the right kind of pricing for the risk which we are undertaking.
09:27 In some sense you are telling me that mispricing or the way the questions are coming about that doesn't seem to exist per se in your mind.
09:36 I have not really looked into because this is something beyond my remit also.
09:43 But yes of course as far as we are concerned we are quite mindful in terms of the risk which we undertake and the price at which we should undertake the risk.
09:55 Got it. Sir, one final question. As you walked through the promenade the last two days there seems to be a very large India presence.
10:01 In some sense maybe a bit more tone down from the flash that was there the last time.
10:08 But enough and more presence, state pavilions, company pavilions. Is the India rhetoric loud and kicking to your mind?
10:19 Very much. I would say that as far as the India story is concerned it has become quite credible over the years.
10:27 And when it comes to the global investors they are all acknowledging the same.
10:33 Are you sensing that in your conversations out here as well? Yes. Great.
10:37 Ok. Lovely talking to you Mr. Khalla. Thank you so much for taking the time out and being with us on the NETV program.
10:41 Thank you. Pleasure. And viewers thanks for tuning in.
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