More Stories

Informist, Monday, Nov. 18, 2024

 

Please click here to read all liners published on this story

--Banking secy: Green deposits very less for India econ size 
--Banking secy: Green bond issuance pretty low in India 
--Banking secy: Very sceptical of cryptocurrency 
--Banking secy: Microfin cos mustn't recklessly lend to women SHGs 
--Banking secy: Bks must not primarily depend on deposits for funds 
--Banking secy: Bks should raise money from mkt to up lending capacity 
--Banking secy: Need to consolidate banking sector 
--Banking secy: Need to put bk profit back to system, improve credit capacity 
--Banking secy: While banking sector robust, credit gap "very very" high 
--Banking secy: Financing climate change proof infra must be priority for bks 
--Banking secy: Govt working to link MSMEs with formal finance structure 
--Banking secy: Ongoing unified lending interface pilot to aid MSME lending 
--Banking secy: Assessing credit gap need, climate finance key focus for bks
 

 

MUMBAI – Banks should look at raising funds from capital markets and not depend primarily on deposits for funding loans, Department of Financial Services Secretary Nagaraju Maddirala said on Monday. "If you look at the biggest banks in the world, I don't know how many deposits they have...but they raise a lot of money. Similarly, we should also be able to raise money from the market through different innovative instruments," Nagaraju said.

 

He said that as customers become more and more aware, they will put more money in higher-paying instruments and that is absolutely normal. "Lamenting that the deposits are declining, I think that's not going to be a solution long term because as people become much more aware of it, and they would like to put their money where they get higher rates of interest, which is normal. So, thinking that they have to put this money into less interest-bearing accounts, I think that's asking too much," he said.

 

Banks should also work towards putting their profits back into the system and use it to fund credit, the banking secretary said. The credit gap in India remains very high compared to other countries, he said. India's credit-to-GDP ratio is around the 58% level, whereas developed economies have over 100%, so that needs to be addressed, he said. 

 

Addressing the credit gap must remain a key priority for banks, Nagaraju said, along with focusing on financing for climate-change-proof infrastructure projects. "I think climate proofing the infrastructure and business is very important and financing the climate-proof infrastructure should be a priority for the banking community." However, Nagaraju emphasised that the Indian banking system remains robust. 

 

Banks also need to focus on lending to medium, small and micro enterprises for India to reach the goal of a developed country by 2047, the secretary said. He said that the government was working towards linking more MSMEs with the formal financial structure. Banks should also channelise more profits back into the system and use it for lending, he said. "When we look at MSMEs or women, we are actually not lending much. We need to capitalise more, flow back the profits back to the financial system," he said. The new unified lending platform would help in increasing lending to MSMEs, Nagaraju said. 

 

Talking about microfinance, Nagaraju said even though he was a big fan of the sector, he does not want companies to lend to women self help groups recklessly because of some recent instances. "Some of the MFIs for their quick gains or whatever reasons, without following the underwriting principles, they just kept on lending to unprepared SHG groups," he said. Self-help groups need to be careful because microfinance companies lend to unprepared groups, which leads them into trouble. 

 

Speaking on green deposits and green financing, Nagaraju said the green bond issuances in the country were very low and so the demand for green deposits was still some time away. "When a discerning demand for those papers is not there, then green deposits are some time away," he said. Nagaraju said he remains very sceptical of cryptocurrencies.  End

 

Reported by Kabir Sharma

Edited by Avishek Dutta

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2024. All rights reserved.