With interest rates significantly going up, this year, we have seen demand for credit shrinking. Is there a cause for concern in the wake of economic growth slowing down?
Credit demand has not shrunk the way it is being made out to be. The credit growth target for public sector banks for the current fiscal is 18% and banks should be able to achieve it as there are three months left for the fiscal to close, though at present, it is 17.7% growth on a year on year basis. However, there is no major concern on that as there has been an improvement in demand.
Do you see interest rates coming down in the new year?
Interest rates have peaked. The monetary policy announcement on December 16 by the Reserve Bank of India was very positive and the central bank has already indicated that there would be a reverse cycle though it would be a gradual process and it is difficult to forecast when and by how much would it come down. The central bank would take a call on interest rates keeping in mind several economic parameters. One of the good things is that inflation has come down.
Banks are struggling to meet their priority sector lending target. Do you think the target would be achieved in the next three months?
There has been a re-classification of advances among other things and this is the reason why we have not been able to be on track.
Global rating agency Moody’s has downgraded its outlook towards the Indian banks. Is it a cause for concern?
There is absolutely no cause for concern. Our banks are very resilient and there is no problem at all. The government has indicated that it would recapitalise the banks.
The banking industry has witnessed a surge in the level of bad assets and the finance ministry has also expressed concern over it. What are the banks doing to ensure that NPA is kept under control?
It is but natural that with a growth slowing, there would be some impact but banks are focusing on recovery and things are under control. This is however not to say that there is no pressure and certain sectors are going through somewhat tough times.
Bank of Baroda had laid out an aggressive expansion plan outside India. Is the plan on track?
We are on track. In the next three to four months, we would open about seven-eight branches outside India.