Shipping sector push won't get banks out of choppy waters: SBI

'There are projects being thought of, which will ameliorate some of the interest, improving conditions,' Arundhati Bhattacharya said

The ongoing thrust on the shipping sector will not help lenders with a revival in the asset quality, but can be of benefit over a longer period, State Bank of India chief Arundhati Bhattacharya said Thursday.

"Asset quality issues are issues of the past. They are legacy issues. Whether they will turnaround immediately, I don't really think so, not in the shipping sector at least," she said on the sidelines of the maiden 'Maritime Summit' here.

The head of the country's largest bank, however, welcomed the ongoing efforts to provide fillip to the sector, saying from a longer-term horizon, things will be better for lenders.

"There are projects being thought of, which will ameliorate some of the interest that we are seeing and definitely, going forward, we believe things will be better."

It can be said that the shipping sector, especially the shipbuilding yards, has been a pain point for banks with loans of thousands of crores either restructured or classified as bad debts. Some shipbuilders in the private sector have gone belly up and been taken over by banks.

Earlier, speaking at a CEOs' roundtable, she said even though the government has given the infrastructure status to shipbuilding, the RBI is yet to come out with its views.

Refinance under the 5/25 scheme is also not possible for shipbuilders as they do not have a "positive number" when one subtracts the operating profit from the outstanding interest, Bhattacharya said.

"How do we ensure these units, which otherwise good but stressed, are revived" she asked the Shipping Ministry officials and warned that if they are not turned around, the shipbuilding capacity will come down drastically.

"There is a crying need to look into these issues and to see how best these units can be rebuilt so as to come out of the stress."

Union Shipping Minister Nitin Gadkari acknowledged that all the 27 shipbuilding yards are under stress and added the government is looking at ways to revive the sector.

On the Vijay Mallya-Kingfisher saga, Bhattacharya refused to comment, saying the matter is pending with the Supreme Court. She also did not comment on reports about the Mallya-promoted Kingfisher Airlines willing to pay up to Rs 6,000 crore out of the Rs 9000-crore dues of banks, saying the matter is sub-judice.