Sustained demand to push private capex: SBI Chairman

New Delhi, Sep 9 (PTI) SBI Chairman C S Setty on Tuesday said sustained consumption would drive private capital expenditure, as corporates are already operating at around 75 per cent capacity utilisation.

He also said that the public capex pipeline is very strong, with public sector refineries making investments for capacity expansion.

SBI's own books have a Rs 3-4 lakh crore of corporate loans, he said, adding that these are for projects which are either approved or at discussion with the bank.

"But this is predominantly coming from refineries, particularly in the public sector refineries and data centres and renewable energy," he said at an event organised by AIMA here.

The core sectors like steel and cement are yet to invest and there is hardly any major investment in those sectors, he said.

"I think everybody is waiting for a sustained domestic demand to come back, and hopefully the measures taken by the government to boost demand, RBI in terms of ensuring adequate liquidity, and interest rate reduction, they all should play out in terms of providing this confidence to corporates," he said.

"Most of the corporates are operating at 75-80 per cent capacity utilisation. This is actually the time to go for expansion. They are just looking to see whether the sustained demand comes back," he said.

Setty also made a case for permitting banks to provide funding for mergers and acquisitions, as done by global lenders.

"Access to the Indian banks for financing the Mergers and Acquisitions (M&A)...if you see the historical perspective of this, not funding the acquisitions is based on the hostile takeover.

Now, he said, acquisitions are much more transparent and the banks are much better positioned to support the M&A.

To start with, it can be done in case of public-listed companies where the acquisitions are more transparent and are approved by the shareholders, and therefore it should definitely be looked at, he said.

The SBI Chairman further said that "the corporates themselves are sitting at Rs 15 lakh crore of cash, which means that they would definitely look for an opportunity to acquire something through a combination of equity and debt. So I think we are all in a position to fund that." Most of this funding happens cross-border, which means that you are actually increasing your external debt, and you have your own securities to fund, he added.

Asked about SBI's Yono app listing, Setty said there is no such plan in the near future. PTI DP DP MR MR