Money & Banking

Lending to see higher growth from Q4: PNB chief

Our Bureau. Kolkata | Updated on February 12, 2021

SS Mallikarjuna Rao, MD and CEO of Punjab National Bank

Mallikarjuna Rao, MD and CEO, Punjab National Bank, on Friday, said that credit growth is expected to start moving on a higher trajectory from the fourth quarter of this fiscal.

The low credit offtake over the last couple of quarters was primarily due to the laxity of demand in the wake of the slowdown induced by the pandemic. It was not due to the risk aversion of banks as is popularly believed, he said.

“During the pandemic there was laxity in demand and despite the tax reforms in October 2019, there was not much of investments coming in, and this goes to show the poor demand. But now with the good creation of supply and demand, we expect lending will see a higher growth particularly from Q4 onwards,” said Rao, while addressing the Financial Market E-Conclave organised by the Bengal Chamber of Commerce and Industry here on Friday.

Public sector banks play a very important role in the revival of economy and in lending to the infrastructure sector.

Banks not risk-averse

Of late, banks, particularly PSBs, have been blamed for being too risk averse and, hence, choke credit to the economy. However, Rao said that based on the past experiences, banks have enhanced their credit underwriting mechanisms so as to ensure credit quality. This would augur well for the overall ecosystem in the long run.

“It is good that banks are taking precaution on quality of credit,” he said.

According to G Rajkiran Rai, Managing Director and Chief Executive Officer, Union Bank of India, corporate borrowers were accustomed to borrowing more easily without focussing on risk management practices, and now they are finding it difficult as more data is required under the enhanced credit monitoring system.

“So, they are feeling that banks have become risk averse but that is not the case,” he clarified.

This would lead to better underwriting capabilities, better risk management, and eventhough some coprorate customers may find it difficult to go through more rigorous processes, it is good for overall ecosystem.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on February 12, 2021
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.