State Bank of India (SBI) Chairman Pratip Chaudhuri on Tuesday said non-performing assets (NPAs) remained an area of concern for Indian banks. He attributed the build-up of NPAs to the slowdown in the domestic economy over the last couple of years.
Citing the example of the textiles hub in Kanpur, Chadhuri said there was sickness in industry. “While disbursing loans, the bank had anticipated timely repayment by industry. But, the borrowers are not able to repay,” he said, adding even the occupancy rate of hotels had come down drastically, signifying a slowdown.
However, he maintained the banks will not give up claims on bad debts and NPA write-offs. “Recently, we got Rs 40 crore from the sale of Lal Imli mill in Kanpur, though the loan amount had been written off,” he said at a conference call here.
Chaudhuri said the bank’s NPA was likely to reduce to Rs 51,000 crore from Rs 53,000 crore at the end of December 31, 2012. He said the Centre had infused Rs 3,000 crore in the bank and the government equity in SBI was 63 per cent. “Even if we raise capital of Rs 13,000 crore to Rs 15,000 crore, and there is no fresh infusion, the government holding would still be 57-58 per cent, much above the mandated 51 per cent,” he added.
SBI is likely to take a call on raising capital during the second quarter of the current year, he said.
Chaudhuri said the key policy signal through repo was quite “weak” compared to Cash Reserve Ratio.
CRR stands at four per cent and is the amount of cash commercial banks need to park with RBI.
It does not earn banks interest income.
Chaudhuri is in town for a two-day visit. Tomorrow, he would visit Rae Bareli, the parliamentary constituency of Congress president Sonia Gandhi for launching 10 new branches.