SBI Chairman Dinesh Khara On Q3 Results | NDTV Profit - video Dailymotion

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#SBI Q3 results: Profit falls 35.4% on one-time pension provisions.   Chairman Dinesh Khara discusses earnings and more, in conversation with Mimansa Verma. #Q3WithNDTVProfit   Read: bit.ly/3UwO9wt

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00:00 Hello and welcome. We are here at the SBI's Q3 earnings event and in a special conversation

00:05 with Mr. Dinesh Khara, Chairman of SBI. Thank you so much, sir, for taking out time for

00:10 us. So my first question to you is about the CAPEX push that Finance Minister Nirmala Sitharaman

00:18 has spoken about in the interim budget, which means that the private CAPEX will also follow.

00:23 So what is your visibility on that and as things stand off now, companies are actually

00:30 raising funds on their own through bonds and pushing that. So how soon are you expecting

00:34 that to come to banks and what is the visibility on that?

00:38 Yeah, thank you very much for this opportunity and the way I look at the situation is that

00:45 we are having a very clear visibility in terms of the pipeline which we have and that is

00:51 nothing but a reflection of the confidence of the private sector players, which is of

00:55 course fuelled by the initiatives taken by Government of India in terms of supporting

01:00 the infrastructure. We have seen it in the past and now we have got a situation where

01:06 our pipeline stands at about 4.6 trillion Indian rupees and I would say that much of

01:13 it, almost about 75% of this pipeline is coming from the private sector and the remaining

01:20 25% is coming from the public sector. But yes of course, it's a huge multiplier, it

01:26 has got a huge multiplier effect and that is something which we have already started

01:30 seeing when we see our SME growth at about 19%, I would say that is a reflection of the

01:36 kind of multiplier effect which is seen of such kind of investment.

01:40 You have also spoken about the credit demand that is going to come in the renewable sector.

02:07 Normally we are all aware that such kind of renewable power, solar power projects have

02:13 got a plant load factor of about 25% only. So when we are appraising these projects we

02:19 are very mindful about this and also the kind of rates which are given, they are given by

02:23 SECI and those rates are invariably there are contracts which are entered into. So which

02:29 means that on the price risk there is very clear certainty, there is no risk which is

02:33 which such loans are exposed to. When we do the appraisal we are very mindful in terms

02:37 of what they will, how the cash flows will really evolve. So that is not something which

02:42 is a matter of concern.

02:44 I would also say that when it comes to solarization initiative which has been announced by Honorable

02:50 Prime Minister, I would say that it is also given opportunity for scaling up the production

02:59 in this particular sector, be it solar cell, be it solar modules, be it solar panels. So

03:04 all this will also will be a big boost and also there would be people who will be implementing

03:11 the solarization plan. So which will actually give a boost to the SME space also. So I think

03:17 it is going to have a huge impact in terms of the growth for the economy overall.

03:23 Capital adequacy

03:24 You had mentioned when the RBI had announced the increase in credit risk rate that the

03:31 SBI will have a 50 to 60 basis point hit in capital adequacy. However, today in the earnings

03:36 conference we saw that higher credit risk rate have hit CRER by 70 basis points and

03:41 CET1 by 49 basis points. So is there any plan to moderate the exposure so that the capital

03:48 adequacy is not hit further?

03:50 The way we look at it is if at all we can pass on this higher cost of capital to the

03:56 borrowers who are availing such loans, that will be our effort. And we have already initiated

04:03 steps in that direction. And the way I look at it is that if at all there are opportunities

04:08 which are decent, which ensures, which meets our risk appetite, we are there to support

04:14 such initiatives.

04:15 You have already mentioned that your unsecured loan book is safer than the secured loan book.

04:23 On the concerns of strong dependence of NBFCs towards banks for loans, a concern that the

04:32 RBI also highlighted, what happens to NBFCs as an industry, what happens to NBFCs who

04:39 are now will not be able to take loans from banks and what happens to SBI's existing

04:45 borrowers because if they go out to raise funds in the market, they are going to bear

04:51 a higher cost of funds on that front?

04:53 See we have been supporting these NBFCs all this while and also all those NBFCs who are

04:58 meeting our risk criteria. We continue to support them but how much it will depend upon,

05:05 how much according to our assessment we should be lending to them. So I think it is not that

05:12 the bank credit is dried up for them. Bank credit is certainly available but yes of course

05:18 some of these NBFCs will be approaching market for raising bonds etc. So various kind of

05:24 opportunities will be tapped and at the same time these NBFCs will also ensure that their

05:31 loan book growth should be healthy. I think that is what the intent of RBI is when they

05:36 have increased the risk rates and which in turn has increased the cost of funds for these

05:41 NBFCs.

05:42 Last couple of questions. PSU banks have higher portion of MCLR loans in comparison to private

05:51 banks. So there is a conversation that the cost differential does not hit PSU banks as

06:00 much as private banks. So now this is not a permanent solution to the liquidity problem.

06:06 So what is your visibility on the liquidity situation and how long can you say that PSU

06:13 banks will be able to play the deposit rates game?

06:17 We have got a liquidity coverage ratio which is as high as about 130% plus. So we do not

06:23 have any challenge as far as liquidity is concerned and apart from that our credit deposit

06:29 ratio was also 66% as on 31st of December. So I think we are having enough liquidity

06:36 with us and we can ensure that we should meet the credit requirement of the economy as much

06:43 as there is a need for it. So there is no such liquidity challenge with us.

06:48 What about the system liquidity at large?

06:50 System liquidity at large, normally we have seen that RBI ensures that there is adequate

06:55 liquidity and they are coming out with the VRR as and when they are observing that there

07:00 is a liquidity deficit in the system, they are coming out with the VRR. I would say that

07:04 it is a very prudent measure to ensure that the inflation should remain in check.

07:12 Last question, I understand SBI has a decent corporate pipeline but there is also a clear

07:18 potential for other banks also to tap into this market, this segment. Now the conversation

07:24 is that because of the aggressive pricing on corporate loans that PSU banks do, the

07:30 risk cover is not enough for private banks. This pricing does not adequately cover the

07:37 risk that the corporate segment has. So how do you assess that and do you think there

07:42 is a risk building up because of the aggressive pricing by PSU banks in the system?

07:47 I will speak about State Bank of India and I would only say that we are very mindful

07:51 about the risk premium which we should have for any risk which we are undertaking and

07:56 we are not compromising on the risk premium which we are required to maintain for underwriting

08:01 any particular risk. So I think it is not a situation where we are trying to out price

08:07 anybody but yes of course, very important is the cost of resources at what cost people

08:12 are raising the funds, they will have to load the risk premium. So we are in a competitive

08:17 position because considering the fact that we have got a cost of resources which gives

08:21 us an advantage, we are not compromising on the risk premium at all.

08:25 Thank you.

08:30 [music]

SBI Chairman Dinesh Khara On Q3 Results | NDTV Profit

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