'Indian growth story will remain in tact whatever'

MUMBAI: State Bank of India's Chairman O P Bhatt on Monday refrained from making any projection about the credit policy, and said "Indian growth story will remain in tact whatever Dr Reddy does tomorrow".

Y V Reddy, Governor of banking regulator Reserve Bank of India, is scheduled to announce the annual credit policy tomorrow.

Speaking at the 100th annual general meeting of the Indian Merchants' Chamber here today, he said the economy has undergone a major shift that has boosted the GDP growth rate to 7-8 per cent and this shift is here to stay. And if it does, the poverty can be banished in 10 years, he added.

Referring to the current slowdown facing the economy, the SBI Chairman said "we need to be careful about it. But there is no need to get depressed. It is only a blip."

He pointed out just 3-4 months ago, everything was alright. "Inflation was under control. Sensex was hitting highs. Now suddenly, there is doom. But do we live quarter by quarter?" he asked. "What is happening is a blip."

Bhatt listed several factors for his optimism. He said "the demographic trend is favourable. The knowledge sector is thriving. There is far more entrepreneurial activity taking place even in tier-3 and tier-4 cities. Indians settled abroad for years have started returning as they have huge amount of confidence in India. Infrastructure is being given a boost."

"Indian growth story will remain in tact whatever (RBI Governor) Dr Reddy does tomorrow," he said. Speaking to reporters, he said it would not be fair to comment on the credit policy now.

When asked whether the banks would pass on the burden to borrowers if the RBI raised the interest rates, he said in that case each bank would take its own view. "Some banks may pass on the rate hike to their borrowers. While some may not," he added.