State Bank of India Chairman Rajnish Kumar said demand slowdown is slowly fading with the onset of the festive season in India.
Kumar said the economy, which slowed down due to a downtick in retail consumption demand, is likely to get a boost during the festive season.
He said the festive season period starting September has traditionally seen a rise in demand for credit and hopes for a similar outcome this year.
"We have seen that traditionally in the festive period between September and April the demand for credit peaks. There is a lot of hope ahead of this festival season," Kumar told reporters while speaking at the launch of SBI's new debit card financing program."
He added that demand for retail credit is growing slowly and the slowdown largely persists to corporate loans.
The SBI chief cited preliminary data of sales at shopping centers during the ongoing festive season and said it will be reflected soon in growth data as well.
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"The demand for retail credit has picked up," Kumar said.
Rejecting the prolonged issue of rising non-performing assets, Kumar said the situation has been overstated and is not as bad as it has been projected.
A report by domestic rating agency Crisil said gross NPAs of banks may fall to 8 percent by March 2020.
Speaking about the recent repo rate cut or the rate at which Reserve Bank of India lends to banks, the SBI chief said cost towards interest on loans will reduce with a 25 basis point rate cut. The RBI has already offered five rate cuts this year to counter demand slowdown.
Kumar said that SBI was the first bank to link the external benchmark to the floating interest rates on housing loans.
He said the bank has also linked small and micro-enterprise loans and retail loans to the externally linked floating interest rates.