Nearing resolution of Rs 170-bn NPAs in power sector: SBI MD Arijit Basu

The country’s largest lender, State Bank of India (SBI), on Friday said about 7-8 power sector projects worth Rs 170 billion are likely to be resolved soon, as lenders are nearing a consensus on these.

There are about 34 stressed power projects and the combined value of their outstanding loans is about Rs 1.74 trillion. 

“We have looked at 13-14 accounts that would entail changes in management, investment, etc. Of these, we are looking at 7-8 accounts very closely to get some consensus among the banks,” SBI MD Arijit Basu said on the sidelines of a banking event, organised by the Centre for Economic Policy Research (CEPR) and NITI Aayog.

When asked how many cases are being referred to the NCLT by the end of the August 27 deadline, he said: “We don’t see major spurt in accounts being referred to National Company Law Tribunal (NCLT). We have been bringing out the stress in the system... we have worked at resolution. We have not waited for the deadline.” 

Banks have already referred many cases to NCLT, he said. The Reserve Bank of India (RBI), in a circular in February, had mandated banks to identify power projects with even a day’s default as ‘stressed assets’, and conclude the resolution proceedings in 180 days else refer them to NCLT. The circular came into effect on March 1, and the 180-day deadline concludes on August 27.

On provisions against non-performing assets (NPAs) or bad loans, Basu said that some guidance has been given and the bank has already provided for them significantly in the first quarter.

“As far as recoveries are concerned, the current financial year has been significantly better; almost 80-90 per cent more than what we were doing in 2017-18,” he said.

When asked about public sector banks requiring more autonomy, Basu said SBI is a well governed bank with a very strong board.

“The board has not only strong internal directors but strong external directors. So, all decisions are board-driven. Corporate governance in SBI is strong and the regulator is also very clear on how a bank should be regulated,” he said. 

On Thursday, former RBI governor Y V Reddy had called for putting an end to the problem of “dual control” of public sector banks.