While private sector capital expenditure is certainly picking up, not all of it is being funded by banks, according to Rajiv Anand, deputy managing director at Axis Bank Ltd.
"I think it's a lot more measured than what we used to see earlier. Corporates are being a lot more cautious, looking at their cash flows and putting on new capacities. They are also using their own accruals rather than using leverage," Anand told NDTV Profit in the latest episode of Bankable.
This is good from an "Indian Inc perspective", but not so good from "a head of a corporate bank perspective", he said.
Corporate India is very, very savvy, Anand said. For Axis Bank, the focus really is to ensure that the bank is serving these companies across the capital structure.
"If they want equity, we can help them, if they want global debt, we can help them, if they want local debt we can and we also use our own balance sheet. So, therefore, the focus is not necessarily on growth, but rather being able to serve the customer," he said.
Speaking about potential risks in the corporate lending sector, Anand said that lenders have tightened their underwriting standards, thanks to all the learnings they have had in the previous cycle.
"This is actually a pretty good situation and it is highly unlikely that we will make the same mistakes that we made in the previous cycle. Maybe we'll make new mistakes," Anand said.
There is little to indicate that major corporate credit risk may show up in the near future, as banks have figured the list of promoters they would like to work with, according to the banker.
"...The promoters that we are backing...we are quite comfortable. You know...in many of these cases we have got a history of 5-10-15-20 years. So, they have proven themselves through the cycles," Anand said.
Watch the full conversation here:
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