City-based Public sector lender State Bank of Hyderabad (SBH) is not keen to lend to microfinance institutions under the present circumstances, Renu Challu, Managing Director SBH said here today.
The bank has an exposure of Rs 60 crore to MFIs, she said, adding that the ground reality in Andhra Pradesh is not conducive to lend further nor the bank has received any requests for fresh loans from the MFIs.
Talking about Malegam committee recommendations, she said, "We have to look at it. We have to see how it goes. Actually Andhra is causing the problem. I don't think anybody in Andhra would be looking to lend very fast unless something changes on the ground," Renu Challu told media persons after announcing the Q3 results.
Replying to query on RBI Governor D Subbarao's comments that Net Interest Margin (NIM) of banks should be brought down, she said under the present situation, banks should maintain NIMs at current levels.
SBH reported NIM at 3.43 per cent in the Q3 ended December 31 as against 2.69 per cent over last year same period.
Recently, Subbarao had said NIMs of Indian banks were high and should be brought down to those of Asian peers, which is less than 2 per cent.
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"RBI has expressed concern on higher interest margins and asked us to maintain the 70 per cent provision coverage ratio. The conditions are not very easy given the present environment. We are seeing issues in sectors like MFIs. I think NIM will have to be around this (the present level). It cannot go down because it also includes the risk provision element," she said.
Meanwhile, SBH reported a net profit of Rs 716 crore, up 27 per cent over the same period last year. Total income stood at Rs 2,214 crore as against Rs 1,788 crore during the same period last year. Total expenditure has gone up to Rs 1,637 crore this quarter from Rs 1,359 crore last year due to increase in salaries and gratuity, she said.