RBI credit policy | 50 bps rate cut hopes are ambitious, says SBI Chairman Rajnish Kumar

Expecting the Reserve Bank of India (RBI) to cut the key rate by 50 basis points in the December monetary policy is an "ambitious expectation", said Rajnish Kumar, chairman of the State Bank of India (SBI).

One basis point is a hundredth of a percentage point.

“It is very difficult to read into the minds of the MPC but 50 basis points (bps) rate cut, to me, seems to be a very ambitious expectation,” said Kumar in an interview with CNBC-TV18 on December 4.

The central bank will be announcing the fiscal year's fifth bi-monthly policy statement on December 5.

“As the interest rates go down and the equated monthly instalment (EMI) goes down, it may give further push as far as the retail loans are concerned," said Kumar.

Also read: Monetary Policy | Prices on slow burn, but growth very much on RBI’s plate

Speaking about credit demand, Kumar said, “There has been a big push around retail, MSME loans and corporate loans. The utilisation of the working capital is yet to pick up and there are many sanctioned term loans where disbursements are yet to happen. Hopefully, there will be demand for funds from the corporate sector.”

“There are higher NPAs in the MUDRA loans but the size of these loans and the portfolios with each bank is not very high in percentage terms," added Kumar.

Talking about Jaypee Infratech, Kumar said that there is a possibility that over a period of time the lenders may be able to recover their entire money.

In terms of DHFL, he said, “There is a lot of interest. Initial interest is good because the retail franchise of DHFL was very good, let us hope for the best. There will be a process of inviting expression of interest (EoI). Whatever best offer in terms of the enterprise value is received, the administrator, committee of creditors (CoC) and ultimately it has to be approved by the regulator. So in the next two months, we will have clarity.”

Source: CNBC-TV18