“I think the Reserve Bank has not changed repo and reverse repo since May 2020 and their accommodative stance has been accommodating. Accordingly, lending rates are low, deposit rates are also low. Hence, NIM (Net Interest Margin) ) Banks are shrinking,” said Manju S Bolakani, chief general manager of the state
(SBI) said.
Therefore, the profitability of banks has been affected unless they have a large treasury like SBI, he said while speaking at a webinar on ‘Indian Banking Sector – Resilience and Resurgence’. PHD Chamber of Commerce and Industry.
“We may be able to offset some of these costs with treasury profits,” she said.
Bolakani said the increasing compliance burden is putting too much pressure on resources. Nowadays, compliance comes before business.
about the disruption caused by
The official said new entrants are forcing banks to partner with fintechs and introduce new products and transform themselves into fintech companies.
“The threat posed by fintech usually targets the most profitable sector in financial services … they are better because they don’t have a brick-and-mortar structure, which is a source of cost for us,” he said.
He added that big technology companies like Google, Amazon and Facebook are entering digital financing because they have a substantial presence in the payment system.
“Because of this, traditional banks are facing a lot of competition,” Bolakani said.
Nidhu Saxena, General Manager (Retail Banking, MSME and Bancassurance Business) at UCO Bank said that MSMEs have been badly affected due to the pandemic.
“There is a mismatch in liquidity (for micro, small and medium enterprises),” he said.
Saxena said the government and the RBI are there to support the economy, and since the start of the pandemic, several measures have been taken to handle the sector.
He said that green shoots are visible in the economy now as companies are getting back to work and GST collection is also increasing.
Ajay Kanwal, Managing Director and CEO, Jana Small Finance Bank said that MSMEs have faced the toughest challenges and this could pose a threat to India’s USD 5 trillion economy target.
Shivan JK, MD & CEO
The bank said that NBFCs are slowly getting back on the growth trajectory as the demand for vehicle and equipment finance picks up.