Current investment climate and overall banking scenario in India very good: Rajnish Kumar
«The picture seems to be very good as far as public sector banks and the overall banking scenario in the country is concerned and it is an effort which had started a couple of years ago,» says Rajnish Kumar, Former Chairman, SBI.
Let us get in an overall picture from you on the entire banking sector because we have seen balance sheets getting cleaner, growth looking strong, it is pretty strong environment as well. So, given the fact that historically private sector banks have thrived, a lot of public sector banks are now looking a little more competitive, valuations as well are looking better. So, how does the picture stack up?
The picture seems to be very good as far as public sector banks and the overall banking scenario in the country is concerned and it is an effort which had started a couple of years ago.
All the banks took steps to clean up their balance sheet.
The recognition of NPAs was done. Adequate provisions were made. And the cycle also has turned around where the credit demand, which was slow for a couple of years, it has come back.
So, as of now, everything seems to be going right for the banking sector. The loan book is growing. The balance sheet is strong.
The profit margins are good. The only thing to watch out will be that the repricing of loans has happened but the repricing of liabilities that impact will come now.
So, there may be compression as far as the net interest margin is concerned. But if the compression in net interest margin is made up by higher business growth and other cost efficiencies, then bank can continue to show a good return on assets and equity and ample opportunities for credit growth are there because the investment climate in the country currently is very good and a lot of
