The public sector banks are of the view that the interest rate upcycle is unlikely to impact the credit growth in India, two MDs told ET Now. Bank of India MD, Atanu Kumar Das said that the credit growth is not sensitive to interest rate upcycle and as economic activity picks up, demand will ensure credit growth. He said that Bank of India expects 8 percent to 10 percent credit growth in FY23.
With the RBI MPC meeting scheduled from June 6- June 8, it is likely that that the interest rates will be hiked again. Das said that the lending rates may be partly impacted by likely increase in repo rates, but the bank does not expect 100 percent transmission of monetary policy rates to the cost of borrowing.
Uco Bank MD Soma Sankara Prasad told ET Now that the impact on treasury portfolio in Q1 FY23 is a worry and the bank is expecting huge mark-to-market losses in this quarter.
On the credit growth he said that the interest rates alone do not determine credit growth and he does not see major impact in next few months on the bank’s credit growth. With the COVID-19 slowing down, he expects private consumption to get a boost.
On the interest rate upcycle, Prasad said that 37 percent lending rates are linked to repo in which rate hike will be passed on immediately. MCLR-linked lending rates will not to be increased immediately with next rate hike by RBI.
In FY23, Uco Bank will be focusing on opening 200 branches in the country to tap potential in retail credit. The bank expects 70 percent growth in retail, agriculture and SME credit in FY23. In corporate credit, the bank expects growth in infra, steel and cement segments.
Uco Bank aims to bring gross NPAs to 6 percent by March, 2023, from current 7 percent and net NPAs to 2 percent by March, 2023, from current 2.79 percent.
Prime Minister Narendra Modi today launched a portal for availing credit-linked government schemes. BOI MD Das said that the creation of this online credit portal is like a single window for loans and will work as a game changer.
