State Bank of India (SBI), the country’s largest commercial bank, sees rural India and large corporates as growth drivers that could be leveraged to turbo charge the economy, said a top official.

“Rural economy is most promising area as of now. They don’t have high density of population and Covid impact on rural population is minimum,” said Dinesh Khara, Managing Director, SBI, at an Assocham webinar on the Indian economy on Friday.

Khara admitted that a major part of the economic activity was being generated from urban India and this was worst affected in April and May. However, things started improving in June in terms of demand, especially after the economy was opened up for activities such as e-commerce.

He highlighted that rural economy now has the ability to feed into large corporates. Khara also said that there is now huge liquidity in the economy even as credit offtake is muted.

“Liquidity was one of the major concerns post-Covid outbreak, and it was immediately addressed by the RBI. The major growth levers now will be large corporates and rural India. Next will be MSMEs,” he said.

Aatma Nirbhar package

Khara said that the ₹20-lakh-crore Aatma Nirbhar package will go a long way in fueling economic growth. “This is very promising as it can help Indian economy to be self sustainable. Infrastructure such as roads sector can help support growth at this point of time. They can play huge role in increasing demand,” he said.

Khara highlighted that the US had, during the great depression, resorted to developing roads to provide employment and liquidity and India may be required to adopt a similar strategy.

To a question on small and medium NBFCs not getting liquidity, Khara suggested that those not making the cut on investment criteria should approach banks for loans.

Sunil Mehta, Chief Executive of Indian Banks Association (IBA), said that rural India is well placed to absorb the economic impetus and “let us do more for the MSME and rural economy”.

He said the government and the RBI has been proactive in taking steps to address the Covid-19 woes. The RBI has infused nearly ₹7-lakh crore to 8-lakh crore into the banking system, he added.

At a separate session, M Rajeshwar Rao, Executive Director, RBI, outlined the measures taken by the central bank since March. He said that RBI measures have helped ease financing conditions and enabled flow of liquidity to various financial market segments.

“During Covid-19 period alone, the RBI has injected ₹6.5-lakh-crore liquidity into the banking system through various operations,” he added. The primary issuance in corporate bonds has surged 30 per cent in first quarter of FY21 to more than ₹2-lakh crore. There has been tremendous improvement in the secondary corporate bond market also, he added.

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