$5-trn economy target needs doubling of banking credit: SBI chairman

State Bank of India (SBI) Chairman Rajnish Kumar said on Sunday that the banking credit would need to be doubled from the current level, if India were to achieve its ambitious target of becoming a $5-trillion economy by 2024.

“At present, the Indian banking credit outstanding is around ~99 trillion and for India to become a $5-trillion economy, it needs to be at least doubled over the next five years,” Kumar said.

He observed that the banks had the capacity to cater such high volume demand from the industry and other sectors. Kumar was talking to journalists during his two-day visit to the SBI Lucknow Circle.

Replying to a Business Standard query, the SBI chairman said the working capital utilisation was still quite low in the domestic economy apart from the absence of big projects. “The banks have enough liquidity and we are capable of meeting all the credit requirement of industry,” Kumar said, adding he perceived a gradual improvement in the credit off-take situation on the basis of projects in the pipeline, which would slowly gain momentum. He said the expected results of the ongoing reforms process would be witnessed only after a certain period of time and not during the transitory phase.

“A big transformation process is underway and we should not lose patience. The central government has initiated a lot of measures, including an elaborate consultative mechanism at the highest level.”

On the question of low credit deposit (CD) ratio in Uttar Pradesh, he observed the CD ratio was directly proportional to the rate of industrialisation in any state.