Next Year, The Growth Rate Will Become Much Better

"Next Year, The Growth Rate Will Become Much Better"

Accepting that the growth for this year will be flat, Umesh Govind Revankar, Managing Director and CEO, Shriram Transport Finance, believes that the curve should gradually inch upwards.

Considering the current crisis, how do you see the demand for new loans and by when do you see the situation normalizing and coming to the prepandemic levels?

New credit demand is coming mostly from the rural market and we feel that it will continue to remain strong from this segment. However, urban demand for loans will take time. We expect the demand for urban loans to come post-September only. So to answer your question, I think by September we will see the situation getting back to normal.

Do you think funding will be a challenge for NBFCs going ahead?

In my opinion, the moment the moratorium ends, the funding will become smooth. Since the moratorium is there, there will be some delay in disbursement because banks would like to wait until the moratorium period before they start lending. So I think post-moratorium – maybe by September – banks should start lending.

How about the stimulus packages with a focus on NBFCs? What is your view on the package and will it boost growth for NBFCs?

The intent of the schemes is very good. There are three schemes: one is the emergency credit line, then there is a partial guarantee and finally MSME funding. All these three schemes are well-intended but in terms of execution there are some challenges which have taken some time. Now we are seeing some momentum. I think post-June we will see good inflow from this package.

What’s your outlook on the NBFC sector in the long run, as for example, a three-year perspective?

I think the next six months or till this financial year ends, everyone will be carrying excess cash on their balance-sheets and so the growth rate will be lower. But next year, I think the growth rate will become much better. Therefore, I expect double-digit credit growth in the next financial year.

How will you quantify the damage caused by the current crisis?

Quantifying the entire economy is going to be a challenge, but if you just look at the day-to-day life and the consumption pattern, I believe there will be some excess consumption in the rural market while the urban market consumption may come down to some extent. Thus, the consumption over the previous year may be flat and may not be growing because in India we have seen a growth rate of 7-10 per cent in consumption in FMCG and day-to-day essentials. So yes, in this year the growth will be flat. However, if the infrastructure spending from the government starts immediately post-September, then I feel there will be higher economic activity in the second half of the year.