Can achieve $5 trillion economy but not in 5 years: SBI CMD Rajnish Kumar

Hyderabad: India’s goal of becoming a $5 trillion economy is achievable but whether this milestone can be reached in the next five years in a difficult question to answer, said State Bank of India Chairman Rajnish Kumar. The private sector, he said, will have a major role to play in the country reaching this goal.

Mr Kumar said that two major steps taken by the Centre – cutting of corporate tax rates and laying of a clear roadmap for investments in infrastructure – will assist the country in reaching the mark.

Mr Kumar was speaking at the first edition of ‘FICCI Dialogue for Actionable Insights’ on ‘Outlook on the Indian Economy’ organised by the Federation of Indian Chambers of Commerce (Ficci)’s Telangana State Council here on Saturday.

On the overall economic situation, Mr Kumar said the GST regime may have had some pain and negative impact that would be negated by the long-term benefits of the system. “I believe in India’s future because of its strong demographics,” he said.

Answering questions from the audience comprising industrialists, business persons, senior government officials among others, Mr Kumar agreed with a suggestion that entrepreneurs whose businesses sometimes fail should not be penalised for such failures.

The SBI chairman, however, said that banks cannot ignore public perceptions when some businesses fail but their promoters’ lifestyles are seen not affected by the setbacks.

“Unfortunately, the past does not inspire confidence about responsible behaviour by promoters. I am all for new beginnings. I favour distinguishing between the promoter and the corporate but the promoter is also a trustee. The breach of trust has to be closed,” he said. Touching upon the high interest rates on loans, Mr Kumar said these are a result of the high default rates.

Mr Kumar emphasised on the role of technology in banking, not just in assessment of loan applications but for day-to-day banking activities by the people. “Technology is bringing productivity gains. Credit costs are coming down and the benefits will be passed on to the people,” he said.

As many as 1.7 crore bank customers have registered for online services in two years and people are increasing shifting from internet banking to mobile banking.

The State Bank of India, he said, treats its corporate clients not as a single client but as part of an ecosystem that includes other service and material providers to the client.

FICCI chairperson Dr Sangita Reddy said part of the challenges facing the country’s economy were fears of job losses, reluctance of people to spend on consumer goods because of fear of economic uncertainties as well as slowdown in investments.

Responding to a suggestion from Ficci Telangana State Council chairman T. Muralidharan, Mr Kumar said the SBI would be open to a tripartite agreement with state government and entrepreneurs with respect to the bank playing a role in disbursing government promised incentives and benefits to businesses.

He hinted that the government would have to underwrite repayments of such amounts to the bank.