RBI policy won't have big impact on us: Shriram Transport

The Reserve Bank of India left the key interest rate unchanged to fight inflation, and lowered the growth projection for the current fiscal to 6.5%. However, it cut the statutory liquidity ratio (SLR) to 23% from 24% earlier.

In an interview to CNBC-TV18, Umesh Revankar, managing director of Shriram Transport Finance says, the cost of money would remain same. "I feel that this will not have a big impact. We were not seeing rate cut right now because of inflation and monsoon being inefficient. We always felt that rate cut would not be there. We had prepared our plans according to that," he adds. Below is the edited transcript of his interview with CNBC-TV18's Latha Venkatesh and Reema Tendulkar. Q: The policy has come and gone. Besides not cutting rates, it also indicates that it is not in a mood to cut rates anytime soon. Also, the RBI went on to say that inflation would be little worse than it thought and the growth will be much worse than what it thought earlier. How does life change for you? Will the cost of money remain the same or does it get little cheaper for you?
A: Right now, I feel the cost of money would remain same. It will not be cheaper for atleast one-two quarter. I also feel that this will not have a big impact. We were not seeing rate cut right now because of inflation and monsoon being inefficient. We always felt that rate cut would not be there. We had prepared our plans according to that. Q: How does life change otherwise for you, if the monsoon is turning out to be a worry, which will mean rural prosperity and perhaps even semi-urban prosperity under question mark and RBI and everyone else guiding for lower and lower growth? Do you see a fall in the volume of rates that you will move? Do you see a rise in possible NPLs as more trucks find themselves out of business for longer period?
A: There could be some pressure on inflation. But at the macro level, I do not see things changes dramatically. Also, I do not see output coming down because the rain gets distributed across India and always 40% of India get deficient. So, that doesn’t mean that agricultural output come down.
In India, the agricultural season is spread across. Even if the kharif output is little less then there is a rabi coming. So, I do not see agricultural output coming down. If you look at 2009 when the rain deficiency was 23%, the output did not come down. Q: What is your likely loan growth number for the year compared to what it was last year?
A: The loan growth looks to be quite good. Even in the rural market, the demand is quite upbeat. So, I don’t really see any reduction in the loan growth because of deficiency in the rain nor because of the interest rate not being cut. At this macro level, interest rate can be passed be on to the borrower, if there is a sufficient demand for the loan. Q: Your company is also closely related to the health and the progress of the monsoon. How bad are things on the ground? Do you expect the slowdown to exacerbate because of the monsoon situation? Could you give us a sense of how monsoon is impacting things on the ground? What the asset quality could then be?
A: Monsoon impact is too early to talk about. The monsoon being deficient in certain pockets doesn’t mean that agricultural output will be low. So, I don’t want to really talk about agricultural output having impact on the overall economy rural or macro activity. Actually the demand is quite good.