The Indian banking system is well capitalised and though there is a blip in credit demand, the situation is not alarming, Aditya Puri, CEO and MD, HDFC Bank, said.

“There would be temporary contraction in credit demand. In retail there is not much impact. We haven’t seen too many job losses. Most people have been seeing wage inflation, so some contraction in credit demand would be there… but I wouldn’t say it is major or alarming,” Puri told reporters on the sidelines of a bankers’ meet with the Finance Ministry in Mumbai.

The HDFC Bank chief said there is too much concern on the asset quality. “I have been saying for two years…The Indian banking system is well capitalised. There are some restructured assets but they are not bad loans. The system is safe and secure. Also, God is on our side with good monsoon,” Puri said.

According to him, till the economy picks up, there will be some increase in restructuring but there is shortage of power (in the country) and we need infrastructure. There has been delay (in implementation of infrastructure projects) everyone has said it and…. people (Government) are working on it.

deficit

Puri also said, “I can promise you the current account deficit will come down. With the conservation of fuel, duty on platinum, decline in gold imports… you must start looking at glass half full than half empty…Markets are never rational. They always correct excess on both sides – positive and negative. I can’t explain the markets.”

Puri said when there is sentiment involved, the currency is likely to overshoot. “The fact, that some depreciation in the rupee was warranted due to inflation differential. And you have enough people saying, that arguably, it should be in the range of 60-63 per dollar range.

“It is not valued on fundamentals but sentiments. But action has been taken and also, we will be able to maintain our fiscal deficit, there are projects being sanctioned and with good monsoon, so it will see its right level,” he said.

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