Dismissing concerns of high corporate debt exposures posing possible default risks to banks in India, top banker Chanda Kochhar has said loans have been mostly given for projects in investment phase and leveraging won’t appear high once companies start generating cash flows.
Kochhar, MD and CEO of ICICI Bank, also said the country’s financial services sector, including banking, has got tremendous growth potential for the next few years.
“While there has been concern over high leverage in some segments of the corporate sector, the debt levels have to be seen in the context of the fact that many corporates are in an investment phase,” Kochhar said in an interview, at the World Economic Forum.
She said the companies’ debt leverage would appear high only until the investments are completed and start generating cash-flows. “As the cash flows from the projects start, the debt levels will be sustainable and should moderate over time. What is important currently is to ensure that the projects under implementation get the necessary last mile clearances and linkages to ensure that the assets become productive on schedule.”
Asked about her outlook for the Indian banking and financial sector, Kochhar said, “First of all, I would say that the Indian financial sector has tremendous growth opportunities over the next few years.