The pressure on deposit rates will continue: Ashwini Kumar Tewari

The rates have gone up in the last quarter especially and they will again go up in response to these rate hikes as the governor himself explained the transmission has been happening better both in the loan side and on the deposit side because for a bank like us also we are now almost 60% plus market linked rates on the loan side.

So therefore the pressure on deposits rates will continue and as you rightly said the loan growth of around 19% or 20% is pretty good and therefore if this continues then we see no reason why this is not going to continue.

Mythili Bhusnurmath: The SME sector is doing quite well but what I understand really from the market is that the SME sector hides a large number of NPAs which have not really come to the surface precisely because the kind of concessions that the government had rightly extended in the past. So there is a lot beneath the surface? Would banks be willing to continue to lend to SMEs given the fact that we still do not know the full picture? Also, in the case of SBI for instance there was a marked shift towards retail. do you see that proportion shifting once again towards corporates rather than retail?
From the past two years the corporate investment was muted and therefore our limits to corporates were not being utilised. Even the sanctioned term loans were also not disbursed to the extent we would have liked. Now that has come back and limits are getting utilised and fresh proposals are also getting sanctioned. So what has happened essentially is that the retail side growth continues at the same pace and it has not increased dramatically but the corporate utilisations have improved for us and that is why you see the overall number for us in excess of 15%.

Also, a similar number may be expected this quarter as well. So therefore this is largely the result of corporate drawdowns and therefore we are supporting corporates where required and basically the underwriting standards have improved and we are no longer willing to give loans to corporates whose ratings are not very good. The SME support continues, in fact our books have grown well in the last two years.

Regarding the health of the portfolio, while the emergency line which was given did support a lot of SMEs and now that the repayment of that has started what we are seeing is that there is not a dramatic increase in NPLs for us in the emergency line to MSMEs. So we think that the portfolio health is pretty good and it is contained and whatever delinquencies were expected have not materialised.

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