NPAs not alarming, says SBI chief

We have got a good handle on the NPAs the accretion of which has somewhat halted, says SBI chairman Pratip Chaudhuri.

The country's largest lender, State Bank of India (SBI), is witnessing asset quality stress on account of economic slowdown but the level of bad loans is not alarming, chairman Pratip Chaudhuri said.

“We have got a good handle on the non-performing assets (NPAs), the accretion of which has somewhat halted,” Chaudhuri told PTI.

The bank, which has been witnessing asset quality stress reflective of the gloom in the economy, has a restructuring pipeline of Rs 2,000 crore at present, he said. The chairman, however, declined to give a projection of the NPAs for the ongoing first quarter, saying he could not give a forward looking statement.

Hit by higher provisioning for bad and doubtful assets, the bank had posted an 18.5 per cent dip in its fourth quarter net profit at Rs 3,299 crore. Its gross NPA ratio also jumped to 4.75 per cent from 4.44 per cent a year ago. The NPA figure was at Rs 51,189 crore, up from Rs 39,676 crore.

It had restructured Rs 8,090 crore in January-March, taking the restructured book to Rs 43,100 crore.

Accounts in the mid-corporate vertical and farm sector have the highest instance of turning bad for SBI. Over the past two years, courtesy the gloom on the economic front, SBI has focused a lot on lending to the resilient retail sector in order to drive loan growth.

During the interview, Chaudhuri clarified that the bank cannot keep away from lending to the corporate sector, as retail loan books alone cannot drive credit growth. In the past, Chaudhuri has been repeatedly expressing optimism on the NPA front but the bank's reported numbers showed otherwise.

On the recent move by the finance ministry to have an oversight committee of experts to look into the veracity of accounts where restructuring is carried out, Chaudhuri sounded a bit worried, saying there is already diligent thinking by an expert committee which goes in before an account is restructured.

“The CDR is not an arbitrary process...If there has to be another group, I don't have any comments on that. I dont think layers and layers of oversight make it effective,” he said.

During his meeting with bankers recently, Financial Services Secretary Rajiv Takru had recommended having such an oversight committee as there have been instances of “malafide interests creeping in” for restructuring of accounts.