After the gradual withdrawal of lockdown restrictions, economic activities have slowly picked up pace, and the country’s largest lender, State Bank of India (SBI), is currently witnessing credit growth of 6-7 per cent. Although there are concerns in some sub-segments, the public sector lender has said it is back to 70-80 per cent of pre-Covid levels.
Addressing his first press conference after taking over as chairman of SBI, Dinesh Kumar Khara said retail credit growth has been good. “But when it comes to corporate credit growth, we have to be mindful of the fact that many of the corporates are also going to debt capital market for funds. So, if we take into account our growth in the non-SLR portfolio, the growth will be about 10 per cent.”
“Having said that, we have to readjust to the new realities and meet the requirements of corporates — be it through credit or investment market. We have got the wherewithal to meet their requirements. If corporates are more comfortable with raising money through the NCD (non-convertible debenture) market, CP (commercial paper) market, we are in a position to meet all their requirements,” he said.
Khara said among his priorities would be the safety of the bank’s employees, its customers, and maintaining the quality of the book.
SBI has a 20 per cent market share in advances and over 23 per cent market share in deposits. An important component that the new chairman would be focusing on is that the advances book should be good and robust. Second, the NIM (net interest margin) should stay protected.
SBI, he said, like its private peers, is also looking at strengthening its balance sheet against any adverse shocks of Covid-19, and hence has raised funds through tier-I and tier-II bonds. After that, the bank’s current capital adequacy position is “fairly comfortable”, Khara said. “With the kind of credit growth we are seeing, we are quite comfortably placed as of now. And, we will reach out to the capital markets for any incremental capital raising as and when we see traction for assets building,” he said.
The bank, Khara said, is cognizant of provisioning requirements and it will continue with the previous strategy of up-fronting the provisions. However, there is no immediate plan to list the mutual fund business and the general insurance business.
As far as restructuring is concerned, the bank has not seen many corporates reaching out to them, he said. Similarly, the restructuring option in the personal loan segment has also not seen many requests. “So, whatever number we have seen as of now, and considering our book, we think it is manageable”, Khara said.
The bank has already provided for its legacy accounts and boasts of a corporate provision coverage ratio (PCR) of around 85 per cent and the overall PCR of 83 per cent.
About new bankruptcy cases, Khara said, as of now we do not have the visibility in the cases that will require a resolution through the NCLT because the restructuring norms announced are quite liberal.