SBI says, Banking foray may dilute IDFC’s infra focus
Infrastructure sector is likely to be affected by the RBI decision to award the IDFC a full-fledged banking license, as it has been facing a slowdown already and the company was a leading an integrated infrastructure finance player ,as told by the State Bank of India (SBI), the country’s largest lender.
Arundhati Bhattacharya, SBI chairperson and managing director told reporters on the sidelines of the annual convocation of Indian Institute of Management Calcutta, RBI’s decision on banking license is welcomed .The only aspect is that the major player in the infrastructure segment is IDFC ,now the requirement for them is to build their own portfolio. Going forward, I don’t see them playing a big role in infrastructure, which for the sector is not good. We need all the people we can get to fund infrastructure
India’s leading integrated infrastructure finance player, IDFC provides end to end infrastructure financing and project implementation services from the time its inception in 1997.
Considerably, it would decrease its experience to the infrastructure sector over the next 18 months as it readies to enter the universal banking space as said by the infrastructure finance major.
Bhattacharya mentioned SBI though will not increase its experience to the infra space to fill the space created through IDFC decision to cut exposure in the segment. They are not working to fill in that vacuum ,she added.
However, The SBI chief welcomed RBI decision to give licence to microfinance major Bandhan, saying, to fill the gaps in financial inclusion it will be of great help. By offloading bad assets of SBI to the asset reconstruction companies (ARCs),she further added that the bank is under ongoing process of selling its non-performing assets (NPAs) which are worth R3,500 crore to R4,000 crore for 2013-14.
Bhattacharya alleged that they are selling NPAs between R3,500-4,000 crore,whereas earlier the state-run bank declared that they would offload stressed loans of around R5,000 crore.
The first quarter position for the current fiscal would remain slows and there would be not much of credit growth as per the SBI chairperson.
Due to RBI’s decision to lower the borrowing limit for them from the overnight facilities, the cost of funds for banks would go up. State Bank of India would hold on to the home loan rates, she said. She mentioned that the cost of funds will increase but we are not focusing on increasing home loan rates.
In its recent monetary policy review the bank has kept the repo rate unchanged at 8%, but decreased the capacity of borrowing limit for banks from the overnight facility.
Source: Financial Express
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