SC order on coal blocks part of cleansing, says former SBI chief

Says industry came out from a much severe situation in 1990s when NPAs were in double digits

Former State Bank of India (SBI) chairman OP Bhatt on Friday said while the investor sentiment would be impacted by the recent Supreme Court ruling on coal blocks, the move was aimed at cleansing the system.

“What was not fully right has now been cleansed to see such mistakes will not be there in the future,” he said.

Stating that there hasn't been any notable investment growth in the country, he said, “investor sentiment would be cautious when something is being done retrospectively.”

On the prospective turnaround in the non performing assets (NPAs) in the banking sector, Bhatt, who retired as SBI chairman on March 31, 2011, said the industry came out from a much severe situation in the 1990s when the NPAs were in double digits and the capital adequacy was hardly 2-3 per cent.

However, he said, “when the economy then started doing well, NPAs had been brought down to less than 3 per cent while the capital adequacy went up to 8-9 per cent. As the economy gets better, a large chunk of stress in the system also gets relieved.”

Bhatt, who was speaking on the sidelines of the launch of Canada-based York University's Schulich School of Business here in collaboration with GMR Business School, said the new government at the Centre was more disciplined, fast and responsive and better at decision making.

"At the execution level, it is a change for the better," he added.