‘You Shouldn’t Use Govt’s Resources to Clean Banks’
From ET Markets Page 1
Wsell ₹ 1 lakh crore a year. One of the things we should do is give them funding. ARCs can put ₹ 8,000₹ 10,000 crore every year to buy assets and another ₹ 8,000 crore-10,000 crore as extra funding to get those assets back on track.
Will listing of security receipts (SRs) help in resolving NPA problems? SR works because it gives you the flexibility to meet the needs of the buyer and the seller. It is a convertible debenture. We need marketbased solutions. We don’t need the government money. After RBI did the AQR process, they came out with the estimate of ₹ 8 lakh crore, which is stressed and potential stress.
Will you apply for a universal bank licence? We are at ₹ 35,000 crore of assets. We will double in five years. We have some room to grow. In last five years, we have grown at 35%. Banking structure is going through a change. Bank branches were big assets three years back. Now, they are saying it is a cost centre. Payments solutions have hit banks. ATMs are unsustainable now. Technology is such a big disruptor that not doing anything for three years is better.
Will you look at acquisitions to grow your business? We will if it strategically make sense. We have done eight acquisitions in the past 15 years. We are constantly looking at it. We look at 1-2 businesses every quarter. We are very keen to acquire any retail business. India is a great start-up country. But to go from start-up to scale-up is very difficult. There are a lot of MFI and retail credit company. We like small acquisitions. We will never take big risks. But surely some small risks. Where do you see rupee in the short to medium term? Rupee has appreciated. The fair value of rupee should be 72-73 against the US dollar to be competitive. We have not depreciated when all other currencies have. In the last three years, rupee has been stable. Rupee should depreciate 7-8% to remain competitive on both exports and imports fronts. When we have inflation of 4-5%, rupee should depreciate. The rupee-pound has appreciated drastically. If you are exporting to UK, you are hurt badly.
Do you expect RBI to cut rate? I think they will wait to see the complete impact of demonetisation. RBI will not cut rates because GDP is falling, but because inflation is cooling off. If they cut, it will be about front-loading. Will they like to frontload, given the elections are round the corner, I am not sure.