India remains a bright spot amid global volatility, but it is time for local lenders to rein in unsecured retail lending so as not to damage the otherwise healthy banking system, KV, veteran banker and Chairman of Jio Financial Services. . Kamath also commented on the US elections, the Chinese economy and whether there will be a revival of capital spending by companies in India.
Kamath, who led the transformation of ICICI and its eventual merger into ICICI Bank, also helped establish the Shanghai-based New Development Bank, formerly known as the BRICS Bank, consisting of Brazil, Russia, India, China and South Africa. It is a multilateral development institution.
In 2020, he returned to India from China to set up the country’s newest development financial institution, the National Bank for Financing Infrastructure and Development (NaBFID). Edited excerpts from the interview: Edited excerpts from the interview:
The Federal Reserve is expected to cut rates again. So China has given a big stimulus. Amid all this, is India still a bright spot in the global economy? Today perhaps no other economy is performing as well as India. I think it is difficult to find another economy as good as ours. We have a long road to develop and that road takes 25 years. We will be economically important to everyone around the world.
How much should Indian investors worry about the US election results?
We probably need to be constantly paying attention to the type of impact that any global-scale event could have on us and how prepared we are to deal with that impact.
We’ve seen it in the last two years and I think we’ve understood how to withstand these setbacks and how to move forward.
We have managed inflation very well, which is why we continue to endure it. This (instability) is likely to become the norm in the economic context.
You are an observer of the Chinese economy and founding president of the BRICS Bank. Can Chinese stimulus have any impact on Indian economy?
It is in their interest to ensure that they (China) return to their growth rate. For an economy this size, more than $18 trillion of stimulus is needed. In the context of the changes taking place globally, this could be a step to strengthen the economy.
How should the Reserve Bank of India respond in such circumstances?
The Reserve Bank has managed the economy beyond the textbook case of management. It is exceptionally well managed between the government and the Reserve Bank.
Since the time of Covid, there has been no rush to do anything and be of great help, keeping rates stable, every step taken in the right way…
There is a persistent feeling that we need to see inflation in practice before we can take steps to address this issue. They are probably taking the right step by being cautious.
Private capital spending remains unregulated, except in a few large industrial groups. While capacity utilization is increasing, what needs to be done to revive private capital spending? Government capital spending is making up for this shortfall, but it has also declined this year.
