Banking sector in sweet spot; should see robust loan growth this year: BoM MD

Bank of Maharashtra (BOM) Managing Director AS Rajeev said that with COVID concerns fading, the banking sector to register strong growth in the current financial year due to stable macroeconomic conditions and growth-oriented policies of the government. is ready. Rajeev told PTI that the banking sector is at an inflection point with COVID-19-related-problems in all sectors of the industry with demand uplift and overall optimism in the economy.

He said the banking sector is in a good shape and expects good growth in the current year provided there are no external issues like fresh COVID-19 wave and continuing geopolitical tensions.

As far as the retail segment is concerned, Rajiv said, the housing sector is growing very well, but there are some issues with vehicle loans due to chip shortage.

Expressing optimism, he said that with the chip shortage issue being addressed, sales are expected to pick up during the year.

He said credit growth in the agriculture sector is more than 10 per cent and a good monsoon will create demand in rural areas as well.

“Except offtake from manufacturing sector, the demand from the corporate sector has also started picking up. I believe the increase in capital expenditure by the government in the budget will boost demand in the manufacturing sector,” Rajiv said.

Finance Minister Nirmala Sitharaman raised capital expenditure (capex) by 35.4 per cent to Rs 7.5 lakh crore for the financial year 2022-23 to continue the public investment-led recovery of the pandemic-hit economy. The capital expenditure for the previous year was estimated at Rs 5.5 lakh crore.

Once the Russo-Ukraine war ends and crude prices stabilize, the upward bias on interest rates should also ease, he said.

It is to be noted that no public sector bank (PSB) has suffered any loss in the April-December period of 2021-22 and made a collective net profit of Rs 48,874 crore during this period.

Public sector banks posted a combined net profit of Rs 31,820 crore in 2020-21. However, there was a collective loss for five consecutive years during 2015-16 to 2019-20.

The highest net loss was recorded at Rs 85,370 crore in 2017-18, followed by a loss of Rs 66,636 crore in 2018-19; 25,941 crore in 2019-20; Rs 17,993 crore in 2015-16 and Rs 11,389 crore in 2016-17. During 2009-10 to 2014-15, public sector banks were making profits on their books.

To improve the financial health of PSBs, the government implemented a comprehensive 4R strategy – transparent recognition of NPAs, recovery and recovery of value from stressed accounts, recapitalization of PSBs, and reform of PSBs and the wider financial ecosystem – a For responsible and clean system. Comprehensive steps were taken under the 4R strategy to reduce the NPAs of PSBs.

As part of the strategy, the government has invested Rs 3,10,997 crore for recapitalization of banks during the last five financial years – 2016-17 to 2020-21, of which Rs 34,997 crore is through budgetary allocation and Rs. 2, 76,000 crore through issuance of recapitalization bonds to these banks.

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