Letter to BS: SBI has set shining example for other banks to emulate

The rise in the SBI's share price too is a strong indicator of an improvement in the country's largest and most respected bank

Apropos “SBI back in black; Q2 net profit at Rs 9.44 bn” by Abhijit Lele (November 6); it is heartening to learn -- as the State Bank of India Chairman says — “we are in complete control of the demon called NPA”. The rise in the bank's share price too is a strong indicator of an improvement in the country's largest and most respected bank. Of course, one is hoping that there is no window dressing of Q2 accounts and no sweeping under the carpet of suspect loans. Notwithstanding the large exceptional income, the lender deserves a pat on the back. After all, they have had exceptional write offs too.

 

This should be a shining example for other public sector banks — indeed all banks — to emulate; clean up their own balance sheets and move on with their business with greater prudence and sharp oversight. That the SBI is expecting to post bigger profits in the future is further endorsement of the course correction measures it has put in place. Banks can't just stop lending — fearing the loans would turn bad — and hope to make money.

 

There is already a rub off on other PSBs. This must continue and percolate to all the banks. Problems can be managed, no matter what the adverse circumstances are, as long as the intent and determination is there. The comments of Lalitabh Shrivastawa (AVP, Sharekhan Research) are very pertinent. Good advances in growth, improvement in asset quality, lower slippages and improvement in provision coverage ratio are all indeed positive indicators at SBI.

Krishan Kalra  Gurugram

 

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