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Rural Electrification well positioned to be a wholesale bank, says lender’s head

As the nodal agency to fund rural electrification projects, the company is only a few years from achieving most of its targets under the government’s Deen Dayal Upadhyay Gram Jyoti Yojna.

November 27, 2017 / 11:28 AM IST
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Is it the fatigue of being in the business of connecting thousands of villages with electricity for almost five decades? Or is it that banking is oh so sexy? Talk to PV Ramesh of Rural Electrification Corporation, the company spearheading the government’s various initiatives to bring power to the villages, and you realise neither is the reason. It’s a plain, unadulterated business plan of an enterprise to look at new opportunities – in REC’s case wholesale banking – as and when they come up.

“When RBI came up with this concept idea of a wholesale bank, we were quite excited about that because I believe we are well positioned to be, not so much a retail bank, but a wholesale bank. A wholesale bank that basically services the power segment or may be energy segment, we certainly would be interested as and when that comes up,” Ramesh told Moneycontrol in an interview lasting a little less than half an hour.

The Reserve Bank of India had on April 7 floated a concept paper to discuss whether there was a need for wholesale and long-term finance banks. According to the central bank’s own research, as of June 2016, commercial banks accounted for about 67 percent of the total financial sector assets in the country. Combined with cooperative banks, their share in the financial sector assets of the country was almost three-fourths.

As per RBI, due to asset quality impacts on the banks' balance sheets, there is an overall declining trend in bank credit, primarily towards services sector, industrial segment and small and medium enterprises. This is also reflected in the decline in the share of the long-term assets (assets with maturity more than three years), relative to total assets, on the banks' balance sheets.