A slowdown in India’s GDP growth to 5.4% in the second quarter is “more of a bullpen”, says SBI Chairman Chala Sreenivasulu Sethi, citing strong credit growth in the agriculture, small and medium business and corporate sectors in the current quarter.
“We don’t need to live from one block to another,” a Hindu Businessline report quoted him as saying.
In the third quarter, SBI, Sethi said, saw steady growth in lending across key segments, even as private lending slowed. He noted that while there was a system-wide slowdown in the personal loans segment, there was “strong growth in agriculture, small and medium businesses and corporate loans.”
As of end-September, SBI’s domestic loan portfolio stood at Rs 33.33 lakh crore, with retail personal advances accounting for 41.9%, followed by corporate loans at 34.7%, SME loans at 13.7% and agricultural loans at 9.7 %.
Sethi expressed confidence in meeting SBI’s guidance of 14-16% credit growth in FY25, backed by the bank’s strong capitalization.
While markets expect a rate cut, Sethi is cautious about the Reserve Bank of India’s (RBI) next move. “The central bank is still concerned about inflation. We do not expect a rate cut in December, but the RBI can provide sufficient liquidity through instruments such as floating rate repos,” he said in a report.
The Reserve Bank of India (RBI) began a three-day monetary policy review on Wednesday, December 4. While the repo rate is expected to remain unchanged at 6.5%, market watchers expect a possible decline in the cash reserve ratio (CRR). .
Calls for a CRR cut have intensified amid tight liquidity in the banking system and slowing GDP growth. A cut in CRR, if announced, would signal RBI’s intention to ease monetary conditions without changing repo rates.
Japanese investment bank Nomura was the only one to break ranks with its peers, predicting that the RBI will cut rates by a full percentage point as early as this Friday, breaking with consensus estimates for a more modest cut of 50 basis points.
Nomura also revised its FY25 GDP forecast downward to 6%, well below the consensus estimate of 6.9% and the RBI’s October forecast of 7.2%. The bank cites slowing GDP growth, slowing credit expansion, softer inflation and muted spillovers as reasons why the central bank should have already begun easing monetary policy. Despite this, Nomura remains optimistic about India’s medium-term prospects.
