Khara said at the SBI Banking and Economics Conclave that improvements in underwriting standards of banks as well as reduction in corporate leverage and better quality of information, including data analytics, hold banks in good stead as they help India become a $40 trillion economy. play a supporting role.
“The number $40 trillion looks a mammoth task, but looking back, it took us 50 years to become a $1 trillion economy and we have added a trillion every fifth year. To grow the current $3.3 trillion to $40 trillion We will need financial resources and in this a high interest rate scenario banks, capital markets and institutions like GIFT City will play an important role,” Khara said.
He said that as long as the risk is underwritten and priced well, there would be no challenge to the banking system, underlining that the banking system has already applied the learnings of the past with SBI in its corporate governance. Has made available up to 95% on the balance sheet. Banks have been smart in pricing risk, he said, forcing companies to put more money on the table.
“Earlier there was equity hybrid debt in infrastructure projects, but now the lesson has been learned. The color of equity is being taken into account. Also, during the last cycle, companies were highly profitable, while this time, a venture is losing out. Things like GST and other data have helped banks assess risk better to make more specific decisions, which means the over all banking system is much better off and better than it was in the last cycle.”
Larsen & Toubro CFO R Shankar Raman Said that although the government is pressurizing the companies to show enthusiasm, but even before Covid, the companies were slow in growth. He said the government will have to share the risk, especially with respect to infrastructure projects.
“When we have these projects, especially in partnership with the government or one of their agencies, there is some amount of disproportionate risk sharing. We need to make sure that in all these partnerships – there is partnership in the true sense. The meaning is to hold hands in the right way and now just lead the horse to the pond and watch the fun go on. Thought leaders in government need to acknowledge the risk aspect and not just talk about What can be done,” said Raman.
He said that the government will also have to resolve the disputes soon. “We have come across situations time and again where the sanctity of various contracts has been called into question. If you are going to sit down with a counterparty who is more powerful than you for conciliation, conciliation can be the only way to go. It There will be loss of value. For private capital and if that is going to happen, banks are going to be worried,” Raman said.
JSW Steel joint md Sheshagiri Rao MVS The global slowdown is also likely to have an impact on India especially as exports have been affected. Rao said, “We exported $112 billion in engineering, which included steel components. It is going to be affected due to the global recession.
Khara cautioned that India is efficient in using its resources to continue its growth.
He also said that the government’s move to increase the tenure of public sector bank chiefs to 10 years ensures a reasonable period, but it could also mean that people without the maturity to hold the top position become CEOs. Go.