SBI planning to lower business costs, bad loans

State Bank of India (SBI) plans to bring down its higher transaction costs and gross non-performing assets (NPA).

"We are trying to bring down transaction costs since it is very high now. In two to three years through our computerisation and networking project we should be globally comparable," said A K Purwar, chairman, said at the bank's annual general meeting in Mumbai on Thursday.

"We have no business to have our gross NPA figure at close to 6 per cent. We should be able to bring it down to about 3 per cent in three years," the chairman told shareholders. The bank's gross NPA in 2004-05 stood at 5.96 per cent, while net NPA was 2.65 per cent.

Purwar aims to bring its net NPA below 1 per cent and maintain it at that level for 4-5 years before achieving nil NPAs.

The chairman has committed to maintain the bank's net interest margin (NIM) at 3.5 per cent, while the best global banks have an NIM ranging from 3.0 to 3.5 per cent.

In 2004-05, the bank registered an NIM of 3.39 per cent, up from 3.04 per cent in the previous year. Exclusive of the exceptional item, the NIM of the bank for 2004-05 was 3.20 per cent.