SBI cautious on lending to infra, iron and steel firms

Public sector lender State Bank of India (SBI) today said it was acting careful while lending to firms involved in infrastructure and iron and steel sectors. The approach is part of the bank's efforts to rein in bad loans, which rose more than 5 per cent in the third quarter of this fiscal.

Despite the cautious stance, it was restructuring the non-performing assets (NPAs) of genuine cases, which suffered the most due to the fallout of weak economy.

According to SBI managing director and group executive, A Krishna Kumar, the bank's stressed assets management group has been tasked to cover NPAs worth Rs 1 crore and above. The group was formed last year amid growing bad loans. The bank also has in place an early warning system to identify assets falling into the NPA category.

"In cases proving sticky even after restructuring, we would opt for recovery through court notices and by selling of assets backed by collaterals," he said.

Not averse to competition
With the deadline for the grant of fresh bank licences by the Reserve Bank of India nearing, SBI said it always welcomed competition and would continue to do so. "Our business started doing better after the entry of new players in 1990s. The new banks showed us the benefits of core banking, which were not known to us then," said Kumar.

SBI expects total offtake in the housing loan segment to cross Rs 142,000 crore by March, the highest in the banking sector. The bank's NPAs here improved to 1 per cent from 1.2 per cent two months ago. In Dec 2013, exposure in this segment stood at Rs 135,000 crore.

"We're seeing good credit offtake for home loans, retail and agriculture, but the corporate segment remained comparatively weak," he said.

Referring to bifurcation of Andhra Pradesh, he expressed the bank considered creation of new states as an opportunity for enhanced lending.