SBI can have 15% credit growth if GDP grows at about 8%: Dinesh Kumar Khara

Dinesh Kumar Khara, Chairman, SBI, says “our endeavour is to ensure that we maintain this level and we expect that when it comes to our deposit rates, we appear to have plateaued already. And henceforth we should be in a position to improve our yield on advances also and that is the reason why I feel that whatever little increase would be there in cost of resources, can also be passed on and we should be in a position to maintain the NIMs at the current levels.”


First of all congratulations for the numbers; quarter on quarter, you have increased your benchmark. I want to talk about this quarter particularly. Is the fear of wage revision still there? Is there anything which we do not know or everything is already provided?
Dinesh Kumar Khara: Thank you very much for your compliment. When it comes to the wage revision, whatever was required to be defrayed by the bank, it has already been taken care of. Either it has been paid off or if at all, it has not been paid off and based upon the estimation, adequate provisions have been kept. So, the likely increase in cost on account of wage increase is behind us. No increase.

If we talk about the next financial year, the credit growth this year has been robust. Do you think you can do better next year considering the base which you have got, considering the economic scenario which you have already elaborated?
Dinesh Kumar Khara: Much of it will depend on how the GDP will grow. And if at all the GDP grows at the numbers which have been indicated, which is about 8%, around 8% plus 5% roughly for inflation plus 2%, so about 15% kind of a growth is something which we expect as far as we are concerned. Irrespective of the base, we should be in a position to grow at this pace if GDP grows at about 8%.

How is the corporate availing the credit? What kind of atmosphere is there currently? What is the limit which you are seeing?
Dinesh Kumar Khara: Normally the capacity utilisation limits have been hit to the extent of about 75% and that is one of the reasons why we are seeing much better availment when it comes to working capital. It has almost gone up about 10% as compared to last year and similarly when it comes to the availment of the term loans against the sanctioning it has improved significantly. Now the unavailed term loans are only about 18%. So that is a very clear reflection that one, of course the availment has improved and secondly, the kind of pipeline which you are seeing about four trillion worth of pipeline that is nothing but a reflection of the corporate in the Indian economy and that is the reason why such kind of investments are being committed by them.

The Reserve Bank of India has recently come up with draft guidelines on project financing, although these are draft but still they have specified the time it will be implemented, the quantum which you have to provide for. What is your assessment? Have you done some homework on this?
Dinesh Kumar Khara: As of now, it is a draft paper and we are in the process of evaluation and it will be a little premature to comment on that. But my broad sense is that it would not be something which is formidable for a bank like us. Nevertheless, we will be sharing our views with IB as well as the Reserve Bank of India and hopefully our views will be given due cognizance before the final guidelines are brought in.

Net interest margins have been challenged not only for your bank but for other lenders as well. With the kind of cost of funds rising and the deposit repricing which you may have to pass on, what is your assessment for the next financial year? Will you be able to maintain this level?
Dinesh Kumar Khara: Our effort and endeavour is to ensure that we maintain this level and we expect that when it comes to our deposit rates, it appears that we have plateaued already. And henceforth we should be in a position to improve our yield on advances also and that is the reason why I feel that whatever little increase would be there in cost of resources that can also be passed on and we should be in a position to maintain the NIMs at the current levels.

Both your ROA and ROE have improved. Now it is over 20% per se. With the kind of targets you have already achieved with ROA of over 1%, what is your target for next financial year for both these parameters?
Dinesh Kumar Khara: If we can sustain these numbers in the foreseeable future, that will be our first level of effort and, of course, once we reach that kind of a level thereafter we will plan for the next.

ET Now: One of the buzz has been regarding Yes Bank stake sale. Although the time period of lock-in ended two to three months back, there are a series of news reports that you are talking to the government and that you have decided. What is your view on that? Do you want to monetise the stake which is there in Yes Bank?
Dinesh Kumar Khara: As of now, I will maintain my earlier stand that the matter has yet to be deliberated at the board level and once we come to that stage, we will reach out to all of you.