Banks need more tools to fight bad loans: SBI's Arundhati Bhattacharya

Bank's Chairman stresses on having appropriate resolution mechanisms to deal with the issue

Resolving all stressed assets in this financial year remains the top priority for State Bank of India (SBI). Keeping that in mind, Chairman Arundhati Bhattacharya tells Mint in an interview that resolution mechanisms need to be in place for the task to be undertaken. 

“We are working very hard to get there (cleaning up of bad loans), but the tools were not already available when the process started. I would have liked them to have been already available,” she told the newspaper.  “You cannot go to war with bare hands,” she added. 

On the issue of treating these stressed assets, Bhattacharya said that there is ‘no one solution that fits all’. “They are in various parts of the country, various sectors of the economy and even various ownership structures. So, obviously, the answers will also have to be different.”

Explaining the problems after classifying assets, Bhattacharya said that maintaining credit flow becomes very difficult. “Though the RBI mandates it and everybody tells us to do it, in reality, it is very difficult,” she said.  She added, “The second thing that happens is that whenever there is a spike in NPAs (non-performing assets), in the way that it has happened in the last two quarters, there is a huge risk aversion that sets in. Both these reasons have an effect of slowing down credit.”

The lender is also looking at two funds in this regard. “We are looking at two funds, one which will look at last-mile funding and give the working capital. We are also looking at taking over some of these assets and running them on our behalf, or taking them over ourselves,” Bhattacharya said.