State Bank of India (SBI) chairman Rajnish Kumar said Monday that while the bank had linked home loans and cash credit facilities to the repo rate, there would be a need to simultaneously have floating rates on deposits. “For any transmission to happen, it has to happen on both sides. And, as we create flexibility on the liability side to link our liabilities to repo, which is an external benchmark and of all the benchmarks we studied, we decided that this is the most workable benchmark,” he explained. If such flexibility is created on the liabilities side, the bank will pass on all rate cuts to its borrowers. Since existing liabilities cannot be repriced, only new borrowers will get the benefit of repo-linked loans. Speaking at Fibac 2019, an annual event organised by the Ficci and Indian Banks’ Association (IBA), Kumar further said that the Centre and the banking regulator have done all they could to ease the flow of credit to non-banking financial companies (NBFCs) and it is now up to banks to implement the policies laid out. “Consultations are on (with regard to the stimulus package) with bankers and different industries. I think the government and the Reserve Bank of India (RBI) have done all they could for NBFCs. So, it is now only the execution and the rollout by the banks or the lenders,” he added. There is nothing further the government can do, Kumar said, adding that there is liquidity, partial credit enhancement and interest rates have moderated. Asked about the progress made in the resolution of stressed NBFC Dewan Housing Finance (DHFL), Kumar said: “That you should ask the company.” Banks will continue to do all that is required to maintain financial stability in the system, the SBI chief added. —FE
