Business Companies 17 Mar 2017 Repair rural househo ...

Repair rural household economy to sustain growth: SBI chief

Published Mar 17, 2017, 8:51 pm IST
Updated Mar 17, 2017, 8:59 pm IST
SBI chief Arundhati Bhattacharya
 SBI chief Arundhati Bhattacharya

Mumbai: Calling for focussing on farm sector growth to sustain higher overall growth, the State Bank of India today said revival in credit demand will stay low until the balance sheets of the rural households are repaired.

Banks are facing two challenges-growth capital and asset quality concerns. The asset quality concerns are due to lack of demand and loans given during the boom years and we don't see both improving in the medium term.

Therefore, the need for focusing on farm sector growth," SBI chairman Arundhati Bhattacharya told a CII event. On overall credit growth, which averaged at a multi- decadal low of 5 percent so far, the SBI chief said she does not see a revival in the near-term.

Agriculture sector would need added thrust to drive the economy as it has been badly hit by two successive bad monsoons, she noted. The tepid demand in rural segment is reflected in low growth of SBI's agriculture loan book.

It grew by just 3.27 per cent to Rs 1,25,068 crore in the 12 months to December 2016. The incidence of bad loans was also on higher side with gross non-performing assets at 5.93 per cent as of December 2016, she added.

Referring to the impact of demonetisation on farming sector, the SBI chief said those segments like vegetable growers, who could not store produce and had to sell at cheap rates, were hit badly.

Similarly, luxury sector has also been hit badly. But the cotton and cane farmers could manage the situation by bartering. She also said during 50-day period of noteban, the bank opened as many as 89 lakh of Jan Dhan accounts, taking  the overall number of such accounts to over 11 crore now, which together have over Rs 16,000 crore in deposits now. On average every such accout has deposit of four digits, she said.



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