Action against corrupt shouldn't be seen as crackdown on India Inc: PM Modi

The target to nearly double the size of the economy to $5 trn is just a phase and the targets are bigger and higher, says Modi.

Prime Minister Narendra Modi on Monday met top industrialists including Mukesh Ambani and Ratan Tata for an ‘’extensive’’ interaction and later followed it up with an address meant to revive the business sentiments, sending out a positive message ahead of the Union Budget.

During his meeting with India Inc bigwigs during the day, the PM focused on issues facing the industry and measures needed to boost the economy. Speaking at the centenary celebrations of Kirloskar Brothers in the evening, he encouraged businesses to invest without fear, stressing that action against a few corrupt entities should not be seen as government crackdown on the corporate sector. The government will walk shoulder to shoulder with the industry, he added, in a bid to revive the animal spirit.

Besides Tata and Ambani, the meeting with the PM was attended by Sunil Mittal, N Chandrasekaran, Anand Mahindra, Sajjan Jindal, Gautam Adani, Venu Srinivasan, A M Naik and Anil Agarwal, among others. An official in the Prime Minister’s Office said, “The PM had an extensive interaction with leading business stalwarts to discuss ways to improve growth and job creation’’.

The Modi government will present its next budget on February 1 and Indian companies are expecting a cut in income tax rates to revive consumer demand. Rationalisation of Goods and Services Tax (GST) is also high on India Inc expectations from the Budget. Although the government has already taken a series of steps to boost the sentiments, including a corporate tax rate cut, companies remain hesitant about fresh investments due to low consumer demand.

At the Kirloskar event, Modi asked the industry to shun pessimism and work towards the $5-trillion economy goal set by the government. “The target of $5-trillion economy is just a phase, our targets are bigger, higher,” he said. “At the beginning of the new year, I will again tell the Indian industry not to let disappointment affect you. Go ahead with new energy… whichever corner of the country you go to for your expansion, the Indian government will walk shoulder to shoulder with you,” the PM said.

Business Standard

PSBs losing lead bank relationships to private counterparts, says study

According to the study, private sector lender HDFC Bank and PSU lender State Bank of India top the list of local banks which are used by three-quarter of large Indian companies.

The public sector banks, weighed down with huge non-performing assets (NPAs), are losing their lead banking relationships with Indian corporates to their private counterparts, said a study conducted by Greenwich Associates, a banking consultant group.

“As of 2016, 20 per cent of large Indian corporates participating in the Greenwich Associates annual Corporate Banking Study said they used at least one public sector bank as a lead corporate bank. By 2018, that share had fallen to just 15 per cent. The bulk of those relationships went to private sector banks”, the study pointed out.

According to the study, private sector lender HDFC Bank and PSU lender State Bank of India top the list of local banks which are used by three-quarter of large Indian companies for corporate banking services. Private lender ICICI Bank is the third most preferred bank for the Indian corporates.

“These three banks also secure the top spots among middle market banking companies, with HDFC in first place and ICICI and SBI statistically tied at the second spot”, the study further said.

Among foreign banks, Standard Chartered Bank and Citi are tied statistically with a market penetration of 51–54 per cent among large Indian corporates, followed by HSBC at 50 per cent. In the middle market space, among foreign banks, HSBC ranks first and Standard Chartered in second and Citi a close third.

The result of the Greenwich study points out that even when PSU banks retain their status as a company’s lead credit provider, they are being cited less often as leading providers in non-credit products such as foreign exchange and cash management—roles that are being filled most often by private sector banks.

The one outlier to this trend is State Bank of India. SBI, which has moved faster and made more progress than other PSU banks to address the NPA issue, actually increased its share of lead corporate banking relationships to 6 per cent of large companies in 2018 from 4 per cent in 2016, the study added.

The study also estimates that 92 per cent of Indian companies will make a change in their corporate banking roster in 2019.

Business Standard