 "Loan recast norms may not hit SBI profit: Pratip Chaudhuri")
The Reserve Bank of India (RBI)’s revised norms on provisioning for non-performing assets and restructured loans were unlikely to have a significant impact on State Bank of India (SBI)’s profitability, SBI Chairman Pratip Chaudhuri said here today.
“The total impact would be about Rs 200 crore a year, which would be less than one per cent on a PBT (profit before tax) basis,” Chaudhuri told reporters. Last week, RBI had increased the provisioning requirement for bad loans and restructured advances.
According to the new norms, all loans restructured after April 1, 2015, would have to be classified as non-performing assets. Also, from June 1 this year, the provisioning requirement for fresh standard restructured advances has been raised from 2.75 per cent to five per cent. For existing restructured loans, provisioning would be increased to five per cent through three years.
In April and May, the bank didn’t record a significant rise in loan demand. “I think the first half is generally slow. So, it would be unrealistic to expect (strong) growth. We are stocking deposits because we think growth would pick up in the second half,” Chaudhuri said, adding the current loan demand was mostly from the retail segment. He expressed concern over the prolonged slowdown in the industrial sector.
Chaudhuri declined to comment on SBI’s loan exposure to Kingfisher Airlines.
“The total impact would be about Rs 200 crore a year, which would be less than one per cent on a PBT (profit before tax) basis,” Chaudhuri told reporters. Last week, RBI had increased the provisioning requirement for bad loans and restructured advances.
According to the new norms, all loans restructured after April 1, 2015, would have to be classified as non-performing assets. Also, from June 1 this year, the provisioning requirement for fresh standard restructured advances has been raised from 2.75 per cent to five per cent. For existing restructured loans, provisioning would be increased to five per cent through three years.
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Separately, Chaudhuri said SBI’s decision to cut retail deposit rates would depend on the action of its rivals. He added the scope to reduce retail deposit rates in the near term appeared remote. Recently, the bank had cut bulk deposit rates.
In April and May, the bank didn’t record a significant rise in loan demand. “I think the first half is generally slow. So, it would be unrealistic to expect (strong) growth. We are stocking deposits because we think growth would pick up in the second half,” Chaudhuri said, adding the current loan demand was mostly from the retail segment. He expressed concern over the prolonged slowdown in the industrial sector.
Chaudhuri declined to comment on SBI’s loan exposure to Kingfisher Airlines.