Banks cautious about lending to SEZs
Private sector banking major ICICI Bank on Wednesday said it would wait for the government to remove the cloud of uncertainty surrounding Special Economic Zones (SEZs) before deciding on lending to such projects.
The bank will wait “for the present uncertainty to settle down and for greater clarity to emerge,” managing director and chief executive officer K V Kamath said during the FICCI-IBA global banking conference.
His comments come in the wake of the wrangle within the government on whether the proliferation of SEZs was a boon or a bane.
The Reserve Bank last week directed banks to treat loans to such zones on par with lending to real estate sector — a decision aimed at limiting the exposure of commercial banks to SEZs.
Asked whether his bank is looking for some mergers or acquisitions, Kamath said there was nothing specific as of now. “ICICI has been growing organically till now and we are happy to grow organically. But we will look at opportunities (for mergers and acquisitions) as they arise,” Kamath said.
Kamath marked down rural India as the next big area of interest for the banking sector. He called it “banking to the unbanked”. “We have 600 million people across the villages (to be tapped). It is a challenge never taken in the world,” Kamath said while adding that the ICICI bank is only a “small bank” in this whole operation.
He added that the group is planning to recruit 40,000 people annually in the next three to four years. “It is not only us, India is happening so this (recruiting) is happening all over the country,” he pointed out.
Kamath estimated that companies will require Rs 8 lakh crore in the next three years to finance expansion as economic growth accelerates. That compares with Rs 3 lakh crore he had estimated three years ago.
“Economically India is doing exceptionally well and we could be growing at least 10 percent a year,” he said.
Kamath expects the consumer credit growth to slow down to 30-35% this year after growing at 40-45% in the last 4-5 years as a result of the “tightening of interest rates”.
However, he was quick to add that a 30-35% rise was also not low considering the base of Rs 2,00,000 crore. Kamath said he doesn’t expect a shortage of capital to retard growth.
Kamath also said that deposit mobilisation for banks was not a concern and there was no strain on the interbank liquidity.
On raising funds, Kamath said that there was no urgency for the bank to raise money, “but we would raise up to whatever is the permissible limit”.
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