State Bank Of Patiala Under Icra Watch

Investment Information and Credit Rating Agency (Icra) has put the State Bank of Patiala on its surveillance list, fearing that the majority of its clients who are corporates will default on loan repayments in a year of slowdown of the economy.

In its latest rating profile, the agency has noted: The general downturn in the economy was reflected in low industrial growth of 6.7 per cent down from 11.7 per cent in the previous year. This led to substantial generation of NPAs. A majority of these accounts have been banking with the State Bank of Patiala since long and were affected by the slowdown in the economy.

 

The agency, however, noted the bank has been able to maintain its NPA to net credit at 11.4 per cent as on March 31 1997, which compares favourably with most of the public sector banks and is marginally lower than 11.51 per cent as on March 31 1996. This is due to the high level of recoveries and growth in credit achieved by the bank.

An Icra official said: Once we rate an instrument of a company, the rating is subject to a review. So we regularly monitor the company, once a year or sometimes even before that depending on the changes in the government policy or changes in the industry.

If a company or a bank is put under surveillance, it does not mean that something is wrong with it. This is something we do on all our clients on a regular basis.

The rating agency, however, said, the bank needs to further strengthen its credit appraisal and monitoring systems to curtail its NPA generation rate. It also added that in terms of other parameters like capital adequacy, asset quality and earnings performance, SBP ranks among the best public sector banks.