NPA woes: SBI to review sectors of exposure

State Bank of India (SBI), the country's largest lender, has set up an intermediary review mechanism to review the sectors where it would go for exposure in view of the mounting bad loans plaguing the banking system, a top official said Friday.

SBI Managing director Dinesh Khara said that the review mechanism, which started functioning two months ago, would calculate the probability of default of an exposure and thereafter decide if it would be prudent to go ahead or not.

Speaking to reporters on the sidelines of a Confederation of Indian Industry (CII) event here, Khara said the review would be made by experts who would make a decision after screening the proposals.

The bank's corporate exposure stood at 40 per cent, while it was 57 per cent for retail, he said.

SBI expects 10 per cent credit growth and 15-16 per cent deposit growth for the current fiscal. He said the bank witnessed good credit growth in September.

Khara said that net Non Performing Assets (NPA) of the bank was 5 per cent while gross NPA stood at 8 per cent.

"The NPA trend is declining," he said.

In the first list of 12 cases referred to National Company Law Tribunal (NCLT), Khara said that the bank was expecting to take a haircut of 47 per cent without impacting the balance sheet.

"We have enough provisions and we will be able to write back," he said.

Asked about the bank's support to debt-ridden IL&FS, he said that the ailing non-banking finance company had filed a petition before the NCLT under section 30 of the Companies Act seeking certain reliefs.

"Unless we hear something from the NCLT and what IL&FS articulates in its proposals to SBI, we will not be able to decide on the quantum of support," he said.

SBI is a shareholder of IL&FS with a stake of more than 6 per cent.