Retail lending will drive business for banks, not corporates, says IDFC's MD & CEO Vikram Limaye. He believes that government investment and spending needs to pick up before the private sector investments can happen. He further adds that India should make use of the current turmoil in the global markets to attract more flows.Below is the verbatim transcript of Vikram Limaye's interview with CNBC-TV18's Ritu Singh
Q: How do you think India will be impacted by what is happening in China?
A: Increasingly we are in a networked world, cannot be immune to risk rising out of the second-largest economy in the world - whether it relates to risk appetite, growth, capital flows, etc. Therefore, I would say India will certainly face the impact of what happens in China but the positive side is the fact that India has huge opportunity for growth and when you look at things globally and investors globally looking to deploy capital around the world, there are very few economies where the potential for growth is as high as we have in India.
Q: How do you see credit growth reviving and if we are talking about growth pick up, when will it start reflecting in the bank's balance sheet?
A: This is something that I have been saying for some time that the underlying growth in the economy needs to pick up and if you look at the different components of growth, corporate credit growth has been quite slow for some time for the last few quarters for sure and the rural economy also seems to be struggling a bit and therefore consumption demand is the only one that has sustained and retail lending from credit growth perspective is the one that has been driving growth, not corporate or rural. It is important for the investment cycle to come back for corporate credit growth to pick up but it is equally true that government investment and government spending for the foreseeable future needs to be strong because for the private sector to come back from an investment perspective is going to take some time.
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