Kolkata: The bank needs to operate on a lower net interest margin for the greatness of the economy, said an Indian state bank official said on Monday.
Speaking at the webinar organized by MCCI, Deputy Managing Director V S Radhakrishnan said lenders must develop the ability to function with NIMS less than the range of 3-3.5 percent.
“Works on lower NIMS both for the economy, although high margins must be good for the banking system,” he said.
Radhakrishnan, however, said the right ECO system must be applied for banks to operate on lower NIMS.
“High credit costs are one of the reasons for higher margins,” he said.
He also said the lenders need to falsify alliances with NBFC and Fintech companies to reach areas that do not have a reconference.
Radhakrishnan said low credit growth among large companies was the reason for worrying, because most companies were balance sheet deleveraging by accessing the equity market and selling non-core assets.
The quality of assets is another concern for the banking sector because the real economy has been hit by a Pandemic Covid-19, he said.
“Rural demand has been affected because of the second wave and weak consumer sentiment.
Many people have lost their jobs,” SBI officials said.
Radhakrishnan said he hoped the RBI would continue to maintain his accommodating attitude despite the threat of inflation.
“The central and state governments need to increase demand,” he said.
The infrastructure sector can be a big game modifier for the economy, and foreign investors must be cleaned to invest in this space, Radhakrishnan added.