The number of transactions and amount deposited in banks following demonetisation is on a downward trajectory, says Rajnish Kumar, MD of SBI. He believes the overall deposits could not have yet touched the highly-speculated Rs 11 lakh crore figure.
Sharing his view with CNBC-TV18 on speculations that the total deposits so far since demonetisation have already touched Rs 11 lakh crore, Kumar says, "I do not know from where this Rs 11 lakh crore figure has come from."
On whether banks are slowing down their lending to SME and MSME segemnts due to gaps in repayment and slackening disbursement, he says SBI is currently doing a sector-wise analysis and will shortly ascertain where it has to be liberal or conservative.
Below is the transcript of Rajnish Kumar’s interview to Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Latha: First, this increase in deposits, what is the tally at State Bank of India’s end and are the deposit flows showing any signs of let-up?
A: Yes, the deposits of specified bank notes (SBN), that has gone down considerably in the last 2-3 days. So, I do not know from where this Rs 11 lakh crore figure has come, but the trend is that the number of transactions as well as the amount deposited, it is on the downward trajectory.
Latha: What is the number at the moment at SBI?
A: I did not get a chance to have a look at the latest number. But as I said, what we got from the first day on November 10 and what we are getting now, it is almost on a daily average of 25 percent of that.
Sonia: So, what do you think the increase in deposits could be over the next one month?
A: Very difficult to say, but all the estimates for that Rs 1,000 and Rs 500 notes, Rs 14 lakh value was in circulation and as per the data released by RBI, you have mentioned that it was about Rs 8-8.5 lakh crore. So, now let us see in the next one month because it is still not being accepted at certain outlets which RBI has allowed the relaxation. So, it is a wait and watch, but as I said, the trend I see is at a downward trajectory.
Latha: We got a number of Rs 2.16 lakh crore from SBI yesterday, it was a sourced number. Can you confirm that?
A: Rs 2.16 lakh crore is the value of the SBN deposit. It could be the correct number.
Latha: I will tell you why, because Mrs Bhattacharya told us on last Sunday, after the cash reserve ratio (CRR) hike that at that time it stood at Rs 1.6 lakh crore. If it is Rs 2.16 lakh crore now, even you have got Rs 50,000 crore last five days.
A: It may be a bit less than that. Not as much because in five days, it cannot be Rs 50,000 crore. It will not exceed. As I said, I have not had a look at the latest number, but it will be definitely less than Rs 50,000 crore in five days.
Sonia: I also wanted to ask you about another report that was doing the rounds in some of the papers about banks now slowing down lending to a lot of the small and medium microfinance companies because of gaps in repayment and slackening disbursement. Is this true? And if yes, it just takes us back to that liquidity crisis we saw in 2010. So, that is the big fear now.
A: Right, we are doing a sector-wise analysis. Our economic research department as well as our risk management department are on the job. But let me tell you that we will definitely do a sector-wise analysis. We would also be looking at expanding our loan book because in these circumstances, there may be many opportunities also that may come up. But we are putting our strategy in place and it will take a couple of days. And then we will decide where to be more liberal and where to be more conservative.
Latha: RBI has allowed loans under Rs 1 crore to be extended where repayment can be extended even by two months and you do not have to re-classify. But that, for SBI will be a very small percentage. What is your sense? How much more can non-performing loans (NPL) rise because of the current cash crunch?
A: It will impact different banks differently because our, for example, home loan book which is a fairly, it is all towards salaried class. Salaried class would not be impacted as much.
Latha: I am asking you where it will hurt. Obviously salaried will not be hurt so much.
A: As of now, I have not seen any spike in the NPL in either of segments. Rather, what is happening is some are coming into the loan book and stressed accounts, not NPL, it has not increased. It is static. So, still one month more probably we will watch, but the current trend as far as November goes, no reason for worry.
Latha: This new large exposure control rules, how exactly should we understand? Will you stop lending now to the large indebted groups?
A: Why would we do that? The only very few groups will be impacted by these guys. What it does is that if you look at the single counter party, the exposure has been increased from 15 percent to 20 percent and what was 40 percent, it has been brought down to 25 percent. So, at a group level and for a bank like SBI with a large capital base, there would be hardly group where these breaches would happen. So, I do not think that it is going to impact the availability of credit in any manner, but some adjustment for a very few large groups may be required and for SBI, as I said, because of large capital base, hardly one or two groups may be there.