High savings, sufficient liquidity to drive growth: study MUMBAI, April 29 (PTI): Strong domestic savings and adequate liquidity in the domestic financial system will push the economy back to the high growth trajectory over the next few years, a top banker said.
“Our own economists expect GDP at 6.2 per cent this year, going back to eight per cent (over the next few years),” HSBC Group General Manger and CEO, Naina Lal Kidwai told reporters at a seminar here today.
Noting that recession in advanced economies has adversely affected the growth momentum of export-oriented sectors such as small and medium enterprises (SME) in India, Kidwai said there were early signs of revival in the economy.
“Anything, which is rural driven, domestic driven, is working well. There is an upturn in the market... Some pick-up is expected in the (SME) sector by end-fiscal,” Kidwai said.
Despite the financial downturn, high domestic savings (at 35 per cent now) and enough liquidity in the system will help bring back money to the fund-starved SME sector, the banker said.
With the liquidity crunch in financial markets, many small units in India found it difficult to get access to adequate funds. Banks had also turned more risk-averse and were hesitant to lend to tiny business units.
The liquidity crunch in the system, which resulted in project delays of many SMEs, had caused slight rise in loan slippages in the last year, Kidwai said.
The downturn in the economy has not impacted Sees in all segments except those in export-oriented sectors, she said.
“SMEs have got pain in export-led sectors, but not across the board,” the banker said.
HSBC will look at the options to expand its existing ATM network moving ahead, Kidwai said. At present, the lender has over 400 ATMs across the country.
With a view to help small units, HSBC has plans to enter into new tie-ups with micro finance institutions (MFIs) in the near future in the areas of renewable energy, she said.
HSBC is currently working with 21 MFIs across the country.
On whether the bank has plans to infuse more capital in India operations, Kidwai said HSBC would bring in capital to India-operations “as and when necessary”.
Also, HSBC would also go ahead with its hiring plans to expand India operations, the banker said.