Sbi Trims Asset Portfolio Growth Projection To 13%
State Bank of India has scaled down its targeted asset portfolio growth to 13 per cent as against the earlier figure of 16 per cent for the current financial year.
Stating this while launching a book on Code of Fair Banking Practice, SBI chairman M S Verma said: The industrial growth has not picked up as expected and once it picks up, the credit will grow. The scaling down of the target is basically due to the sluggish credit offtake during the current year.
The announcement by the SBI chairman comes just prior to the credit policy. In fact RBI has been trying desperately to increase the credit offtake. The step by SBI will sent impulses of slowdown through the financial sector. That apart, the share prices of SBI are expected to drop due to the announcement.
The advances will be lower than the estimated figure of Rs 6,93,889 crore estimated by the bank for the current financial year. However, Verma said the profit is not expected to be affected due to the lower growth in advances.
SBI chief said credit growth had not been as fast as expected during the first two quarters of the current year and the coming two quarters will be very crucial. During July the credit had picked up but again in August it slowed down comparatively. The slow credit offtake is linked to slowdown in industrial growth. The industrial growth for the first quarter of 1997-98 was 5.1 per cent in the general index and 4.8 per cent on the manufacturing index as against 12 per cent and 15.4 per cent respectively in the first quarter of 1996-97.
Verma said that of the Rs 60,000 asset portfolio, the bank had allocated nearly 25 per cent for infrastructure projects. A good portion of the banks credit is based on the takeoff of the infrastructure projects. Since some norms binding infrastructure projects are not clear, the money sanction by the bank has not been disbursed, he said.
The SBI chief felt that in order to improve the flow of credit to infrastructure projects, the bank is looking for more clarifications in legal procedures for securitising the debt. In fact, Industrial Development Finance Corporation is thinking of developing a projects where they would take the debt of other entities after five to seven year. Once this is in place, my money will be free and I can recycle the money to sanction new projects, said Verma. SBI is also thinking of issuing bonds backed by the long-term loans they have sanctioned. This is another form of securitisation.
In connection to the at par facility, Verma said: We have modified the at par facility since we realise that it is not viable to provide all our clients to this facility at all the 8800 branches of SBI. Except for a few clients like Unit Trust of India, all the clients of SBI have been asked to decide on the select number of branches where they would like to have such a facility.