Taking a que from Union Finance Minister Pranab Mukherjee, who expressed concern on Monday over the asset quality of the banks, the country's largest public sector Bank State Bank of India (SBI) today said it will bring down its net NPA to 1.62% during this fiscal, from 1.8% now.
To achieve this target, the Bank has constituted a Stressed Asset Management Group, which so far made a cash recovery of around Rs 1,000 crore in one year, the highest in the bank's cash recovery history, according to State Bank of India (SBI's) Chairman Pratip Chaudhuri.
He was speaking to reporters after handing over keys of the Ambulance van to Cancer Institute in Chennai as part of Bank's CSR.
The Group has around 400 people and opened nine offices, which are focusing only on Stressed Assets.
He noted that prior to this, the recovery was around Rs 700 crore in the Bank's history.
"We are also asking borrowers to consider restructuring of loans, ahead of default," said Chaudhuri, adding that most of the stressed assets relate to exports, especially textile.
"This fiscal we will bring down the bad debts by 20%," he said.
On whether the bank would consider selling these stressed assets, he said, “Last year we could not, since asset
reconstruction companies did not have cash.”
Meanwhile, SBI is planning to approach Moody's to relook the negative rating the firm gave it. The request comes on the back of an increase in the bank's capital.
Chaudhuri added, "As our capital position has strengthned now, we will go back to them (Moody's) to rate us again".
SBI's Deputy Managing Director Sharad Sharma said, "One major issue which they (Moody's) had while rating the Bank relates to uncertainty of the capital. Since we have enough capital now, we are planning to approach them for rerating.".
The bank has received around Rs 8,000 crore from the Government, and has got Rs 11,000 crore from the profit it made.
Chaudhuri said, "The bank's capital is comfortable now and the government has assured us that they have kept aside Rs 12,000 crore, which could be made available to SBI if required.”
SME loans to get cheaper
SBI is also planning to bring down the interest rate for SMEs, Chaudhuri said, adding that at present, the bank's interest rate is around 12-17% for the SME segment, and will be brought down to 10.5-15.3%.
The reduction is likely to come with effect from June first week.
Sharma said the move will help the bank to bring back customers that the Bank lost to competitors due to high interest rate.
At around Rs 80,000 crore, SME loans constitute about 12-14% of the bank's total advances.