Will have to seek an extension for PSBs to comply with minimum public shareholding: Vivek Joshi

Q: While credit growth has been firm so far, there are concerns regarding slower deposit growth. There are also concerns that the credit growth may taper in the next financial year…

A: We have been pushing public sector banks to go out and meet customers. This used to happen earlier but the human touch with customers is missing at public sector banks even though they are offering very good services.

Growth in advances has been around 13.6 per cent so far in this financial year, while deposit growth is around 10.6 per cent. This has been the trend in the last few years also. But, to say that credit growth will taper down next year, I do not agree…private sector investment is picking up.

Q: Where do you see the credit and deposit growth levels in the coming year?

A: Credit growth this year will be approximately 13.5-14 per cent, while deposit growth may be around 11.per cent . So, next year credit and deposit growth should be around the level of FY24. It will also depend on how RBI decides the course of the monetary policy.

If we consider everything which remains as it is now, the outcome will be almost the same and maybe slightly more on the credit growth side. The private investment announced in FY24 has been substantially higher in basic chemicals, real estate, iron & steel, electrical machinery, non-conventional energy, automobiles and power, among others.

New investment announcements were Rs 40 lakh crore in FY23, with 68 per cent contribution by the private sector. In the first nine months of FY24, new investment announcements worth Rs 20 lakh crore have been already reported.

Q: How much capital will be mobilised by PSBs?

A: On the one end of the spectrum, we have SBI in which the government owns almost 57 per cent, and on the other end, we have Indian Overseas Bank with 96.38 per cent stake, Punjab & Sind Bank with 98.25.epr cent and UCO Bank with 95.39 per cent. We have allowed banks to raise funds from the market in terms of QIP (qualified institutional placement), additional Tier 1 (AT1) and Tier 2 bonds.

So far this year, PSBs have raised around Rs 43,000 crore (including Rs 14,500 crore via equity) through these three instruments and they are likely to achieve Rs 60,000 crore by FY24-end. This compares with Rs 45,000 crore raised in FY23.

Q: Will you seek a further extension to meet minimum public shareholding (MPS) norms for some PSBs?

A: Depending on the decision of PSB boards, we allow them to raise funds via QIP in equity, which would help them bring down government holding to the 75 per cent benchmark. However, we will have to seek a further extension to comply with minimum public shareholding (25 per cent) as it looks very unlikely that some PSBs will reach the milestone (by August). There is no compulsion from the government side to liquidate equity holding though.

Q: What is the plan for IFCI?

A: We are thinking of some restructuring, a merger is one possibility, and a reverse merger is another. Closure can also be considered. So, we are weighing three to four ideas. Nothing is finalised as yet. IFCI is being provided Rs 500 crore this year to settle some bonds and the interest liability.

Q: Will more capital be infused in public sector general insurance companies?

A: The Parliamentary Standing Committee has talked about giving some capital to them. So, we will see when the report comes. We have already invested around Rs 7,500 crore in these insurance companies in the last four or five years. The performance of Oriental, New India and National Insurance were very good in Q2 FY24 with all of them having reported profits.