Parekh's statement came a day after L&T chairman AM Naik expressed his concern over the state of the economy
HDFC Chairman Deepak Parekh on Friday said that there is evidence of a continuous slowdown in the economy and it is reflected in lower GDP growth of 6.8% for FY 2019.
His statement came a day after Larsen & Toubro (L&T) chairman AM Naik expressed his concern over the state of the economy.
Parekh said that the problem is because of the continuing reluctance of banks to lend and the situation is worsened by the tight liquidity situation in non-banking financing companies (NBFCs) and housing finance companies (HFCs).
In his speech to shareholders at the annual general meeting (AGM) on Friday, he said, "The challenge today is risk-averseness. Banks are reluctant to lend and there has been a flight to safety where a select, few, high rated NBFCs and housing finance companies have access to funding, while several others' access to credit has been choked. As a result, a number of NBFCs have curtailed disbursements and this, in turn, has spillover effects into other sectors."
"To my mind, what is critical is re-instilling confidence in lenders to support growth in the economy," the HDFC chairman said. He expressed hope that normalcy will be restored by the time the festive season sets in.
He also said that there is considerable evidence of a distinct slowdown in the economy and it has reflected in lower GDP growth of 6.8% in FY2019.
As per recent reports, the GDP growth falls to 5.8% in the fourth quarter of FY 2018-19 and growth of eight core industries slumped to a 50-month low of 0.2% in June as against 4.3% in May.
While responding to shareholder's queries, the HDFC chairman said that there is no liquidity issue in the economy, as the RBI and the government have taken enough measures to ensure regular cash flow in the system.
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