'I believe those...': What SBI chief Dinesh Khara said about Goldman Sachs' downgrade

Dinesh Khara, Chairman of State Bank of India, sees the national lender clocking 14–15 per cent growth in FY25, buoyed by overall macroeconomic conditions.

Khara's optimism, however, conflicts global research firm Goldman Sachs recent rating downgrade for State Bank of India, ICICI Bank and YES Bank, citing the end of the “Goldilocks period” for financial sector entities.

“I believe those who are closer to the object can see it better, as against those from a distance," Khara said to a Hindu Business Line query on the downgrade.

Stressing that the  global brokerage may have its own view, Khara told the paper that from "a distance one could use a prism through which they would like to see things. From nearer, I believe everything is good”. 

According to Sachs, the share of deposits in the household financial asset mix has decreased to 45 per cent in FY23 (compared to 48 per cent in FY21), with incremental flow of only 35 per cent going towards deposits.  This, it said, has led to flows of net financial assets as a proportion of GDP to more than halve from FY21 to FY23.   

"Bank deposits also see competition from government small savings investments which have now grown to 20 per cent of the total deposit pool in the system, and offer higher interest rates compared to bank term deposits."

According to Khara, India ranks much ahead of other economies in terms of growth possibilities, adding that faster pace of loan draw downs and strong sentiments are only boosting the lender's intent. 

The RBI on Tuesday imposed a penalty of ₹2 crore on State Bank of India for “contravention of provisions of sub-section (2) of Section 19 of the Banking Regulation Act, 1949 (the BR Act), and sub-section (2) of Section 26A of the BR Act read with the Depositor Education Awareness Fund Scheme, 2014.”

The Statutory Inspection for Supervisory Evaluation for FY22 revealed that SBI held shares as pledgee of an amount exceeding 30 per cent of paid-up share capital of certain companies. It also failed to credit eligible amount to Depositor Education and Awareness Fund within the period prescribed in the BR Act.