RBI Governor Shaktikanta Das, in his first meeting on December 12, met various state-owned bankers, who sought some easing in the one-day default norms announced by the RBI through the February 12 circular.
Mrutyunjay Mahapatra, MD & CEO, Syndicate Bank was also present at the meeting. Mahapatra spoke to CNBC-TV18 about how the meeting went through and what were the key issues discussed. Here's the full transcript of the interview:
Q: Can you tell us a little bit about what took place at that meeting? I understand that Syndicate Bank was in attendance there; what were the key issues that were discussed and the big takeaway?
A: Governor Das has taken over just about 4-5 days back. It was part of his taking stock of the opinions of industry leaders, especially the PSB chiefs. So he first met one round of chiefs who are based in Mumbai and thereafter he met those who are based out of Mumbai.
So what happened there was he stated that he wanted to speak in general about economy, about the sectors in which we are seeing green shoots coming up, as also how to bring back the health of the public sector banks back on track. So, these were some of the headline items. In addition, I think he is also concerned about the credit off take in some of the key sectors like housing and also the MSME, those were also discussed.
Q: What is the constraint for lending more, did you ask for capital, are you getting it?
A: The capital, PCA, stress relaxation, those were discussed in general, nothing specific. What governor Das was more concerned about that whether these new liquidity windows, for example, a few days back pool purchase on housing finance and now the open market operations (OMO) increasing, whether these are suitable or how we are perceiving it, that he wanted to know.
Q: How are you perceiving it, is the general liquidity enough or were the bankers wanting special liquidity for NBFC companies to kick start growth?
A: What came out was that liquidity per se is not a constraint because many of us are sitting over excess SLR and other things. What most of us told was that because of the past experience in increasing MSME NPAs and also the NPLs which have happened in the past, that is preventing us from taking exposure without additional due diligence. So, the liquidity is not a constraint, but the factors like credit risk, like data risk, etc. those things are the constraints.
Q: You also said that he spoke to you about or spoke to the bankers about how to bring back the health of the PSU banks. Apart from stress relaxation on the capital of PSU banks through the PCA, anything else that he spoke about, any suggestions that were offered?
A: We spoke about how to bring the long term health. Sometimes which is not in the domain of the RBI but in the domain of general administration is building this management, building the HR bandwidth, building the technology capabilities which can handle steel. So those were also discussed. RBI could only relax about the capital requirement and maybe to an extent which sector to go or which sector not to go. However, the other things like these long term measures were also discussed.
Q: What were the key asks of the bankers?
A: The key asks of the bankers were nothing because as governor Das told right at the beginning, he is not here to take the asks and solve them. He said that because he is new, he wants to know what are our views and he was taking notes and so were the four deputy governors who were present. However, there was no ask and give kind of a situation.
Q: What would your key takeaways be, did you get a sense that they may lower the capital ask, it is already been lowered, that 0.625 percent of BASEL related capital is now postponed by one year, did you get a sense some more of that will come or you got a sense that there could be a package for MSMEs, any takeaways at all?
A: BASEL what was again clarified and reiterated was that BASEL is also seeing the general financial stability of the country through what RBI is prescribing as capital. So it is not that RBI on its own is prescribing a lot of capital or something like that; there is an international framework which is evolving to which RBI must get compliant.
The other thing that was coming out was that the openness of RBI in consulting the chiefs of banks and kind of ingesting all the opinions that were around. In fact governor Das also told at the end that there will be and more occasions to consult the PSU bank heads as well as other bank heads. The opinions will be taken on board and those will be taken forward.
Q: MSME you are expecting something, could that be a general expectation?
A: MSME, clearly, was on the agenda. Some of us told that in their banks, MSME growth is growing between 8 percent and 10 percent. Some of us told that MSME growth we are not seeing beyond 4-5 percent. However, also we discussed whether the MSME sector needs any additional products or additional services, or something like that. However, what came out was that MSME sector needs support and what we can do to see that this sector gets adequate liquidity.
Q: You also said that governor Das was concerned about the credit off take in the housing and the MSME sector, but why is that, I thought credit off take was pretty good? As per RBIs own data in November, the credit growth was almost 15 percent across the board. What was the concern about?
A: The concern was that whether banks per se are seeing any constraint in growth or they are growing because of the pool purchases from large housing finance companies. So some discussion was around that. However, the overall credit growth as per the RBI data, as you told, is not too bad.
Q: What was your own takeaway, was the growth because you are finding more takers and you have liquidity or is it because there is a lot of purchase of NBFC loans?
A: There are a group of banks who are quite short on priority sector advances and they are doing pool purchases or their parking money either with CIDBI or with NABARD. Whereas in my bank, it is quite good in terms of the priority sector finance. We are much ahead of it. So we are not doing large pool purchase.
Q: How are slippages shaping up, I think we did see that even in the second quarter it was much lower than the first quarter, but you did see additional slippages about Rs 3,000 crore. Is it troughing out, is it likely to reduce further?
A: As they say, sometimes the journalists are ahead of the bankers. So I think it is.
First Published: IST