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SBBJ eyes sale of bad loans worth Rs 200 cr

The bank also looking at cutting deposit rates if RBI cuts repo rate in monetary policy later this month

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(SBBJ) is planning to sell non-performing assets (NPAs) worth Rs 200 crore by March 31, 2013. "Our team is looking at selling NPAs. We may sell about Rs 200 crore, if we get a good price," said Shiva Kumar, managing director of the bank.

For the quarter ended September 30, the gross NPA ratio of the bank declined to 3.29% from 3.70% a year ago. While the net NPA ratio stood at 1.91% compared with 2.48% at the end of September 30, 2011.

The bank is also looking at cutting deposit rates if the Reserve Bank of India (RBI) cuts the repo rate in the third-quarter review of the monetary policy later this month. "If there is a cut in repo rate, we will first reduce our deposit rates. We will cut across the tenures by at least 25 basis points," Kumar said.

The street expects the RBI to cut the repo rate by at least 25 basis points on January 29.

The capital adequacy norms as specified under Basel III regulations which will be implemented from April 1 will result in banks shoring up their tier-1 capital over the next five years. According to Kumar, would require Rs 3,000 crore equity for the same purpose. Under Basel III regulations, tier-1 comprise of core equity capital. "Our capital adequacy ratio was 12.81% last quarter out of which tier-1 is above 9%," he said. The equity capital will be by way of infusion from parent (State Bank of India) and rights issue.

For the nine months of the current fiscal, Kumar said that the bank's credit and deposit has grown by above 10%. "The last quarter is always better so we are expecting 17% target for credit and 16.5% for deposits to be achieved," Kumar said.

According to Kumar, the next fiscal will be better in terms of credit growth. "Right now demand from corporates is not much and credit growth is subdued. But in another six months down the line I do expect turnaround. GDP growth will also take a reversal. Our credit and deposit growth for next fiscal will be 19-20%," he added.

The industry awaits the RBI to issue the final guidelines on new banking licence. According to Kumar, with the entry of new banks in the private sector the industry will witness consolidations. "There is no merger proposal for SBBJ at this point of time with SBI. But in due course it will happen and associate bank merger is a natural fit," he said.

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