SBI Chairman Shri Challa Sreenivasulu Setty, shares his insights on the RBI’s Latest Monetary Policy

First of all, thank you, Lata. It's always good to interact with you. The broad assessment that has come out of this monetary policy announcement is that there will definitely be primary as well as second-order impacts of the West Asian crisis that is getting reflected in the slight moderation in the growth as well as inflationary expectations which are building up now. But it is also important that most of the effects will be more pronounced if things linger for a long time from Q2 onwards. If you see, the inflation is also projected to go up from Q2 onwards. But I think there definitely would be some impact on the growth rate, which I agree with the forecast. As far as credit growth is concerned, it's a function of the macros. The banking system has been on the growth path. Credit growth has been robust. We have not seen any impact in the last quarter broadly in the banking system. Q1 generally may not be a great indicator because it is generally a tepid quarter for credit growth. So we need to see Q2 and Q3 how credit growth is going to play out. There is an impact on many of the sectors, particularly those dependent on gas supplies. We have seen some of the SME clusters being really impacted on account of lack of availability. From what I understand from many industry players, supply constraints probably will be addressed — you go from one source to another. But cost-led inflation is a major challenge and may probably impact overall consumption sentiment. I think we need to be watchful on that. Broadly at this juncture, let's wait for one more quarter before we take a call on what kind of impact there will be on credit growth.

First of all, we believe and let's hope that this disruption will come to an end as soon as possible. The ceasefire is definitely a good positive development. But the disruption of this level would impact the businesses. We hope that there will be statutory, fiscal, as well as regulatory support coming. We are engaged with the Government of India as well as RBI to see that some of the support — the cash flow support as well as regulatory forbearance — which can be given. At least we can prevent the immediate impact, while the long-term impact would have to be addressed structurally. Whether we can provide solace in terms of additional financing, the way we have done during the COVID period. We got a very positive response from the Government of India on that.

Yes, and they've extended further beyond 31st March. And what we are now seeking is that there should be some broader relief which should be available to everyone, because it is very difficult to say who's impacted by the West Asian crisis and who's not. Hopefully there will be some measures from the RBI's point of view. They're also looking at the developments. The first thing I would expect is the Government of India's support in terms of an emergency credit line coming up soon, followed by some regulatory forbearance, which is something the banking industry is seeking.