Thaindian News

Kolkata, Dec 9 (IANS) Credit growth will start picking up in 2012, Shikha Sharma, managing director and chief executive officer of Axis Bank, said Friday.

“Credit growth is directly linked to what is happening in the economy. Our belief is in the long-term growth of the economy. So we expect credit (offtake) to pick up,” she told reporters on the sidelines of a leadership summit organised by the CII here.

Credit growth has been moderating over the past two years. Sharma said the slowdown was primarily due to a decline in demand from large corporate houses.

“The industry was on a tightening mode, they were looking at leveraging their existing investments rather than pumping in fresh investments,” she said.

Sharma expects the high interest rates would moderate next year. “As interest rates begin to moderate, which should happen next year, on account of a moderation in inflation, we should see credit picking up.”

Sharma, however, said it would be difficult to predict when the moderation of interest rates would take place.

On the possibility of restructuring of accounts, she said in the present economic scenario it was inevitable that companies would have a cash flow mismatch.

“Banks should take a call on which companies are fundamentally strong and are just facing a temporary cash flow mismatch before considering the possibility of restructuring,” she said.