Despite the loans extended to Kingfisher Airlines being declared as non performing assets (NPAs) — even as a part of these borrowings are to reflect in December balance sheet — the State Bank of India said it was more comfortable on the NPA front during last month as compared with the situation a couple of months ago.
Having firm control over NPA levels in a somewhat deteriorating repayment conditions was partly possible due to special measures taken by the bank, particularly by sending the teams of own officials from village to village persuading the borrowers for loan repayments.
“This was not a formal procedure and not used at this scale earlier. This time we have taken number of such steps to control and monitor NPAs. We have institutionalised the recovery process, which brought some focus into the NPA issue,” A Krishna Kumar, managing director of SBI, said.
The bank has also deputed deputy general managers at important locations within each circle to monitor loan repayments apart from starting account tracking centres across the country. “This process has helped us in bringing down the NPAs,” he said. However, he did not reveal the exact numbers to explain the NPA scenario of the bank.
CDR facility
With the slowdown in the economy, SBI has started receiving a large number of requests from across the country, compared with last year, for availing of corporate debt restructuring (CDR) facility from small, medium and even large companies, Kumar said in response to a question on debt restructuring. Sectors from which most of these requests are coming include agri business, automobile and textiles.
Kumar said the bank would consider these requests as far as possible as the process involved the views of the consortia of banks, borrowers and above all it was a mechanism monitored by IDBI.
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“We have done quite a few exercises in the last few months in this regard and have requested cooperation of all the banks of the consortium.” Coming to airlines, he said the borrowing was too large to come under the CDR process and therefore the loans extended to Kingfisher were declared as NPAs by his chairman a couple of days ago. However, he said the banks were working on solving this problem. Stating that there was no plan to tinker with the savings bank (SB) rates, he said the deposit growth had been quite robust to the extent that they had to ask their branches to discourage bulk deposits.
However, the bank had been encouraging retail deposits as ever. Deposits were in fact helping the bank to keep its net interest margin (NIM) high and may end the year with over and above 3.5 per cent indicated earlier.
The bank is expected to end the current financial year with a deposit growth of 19-20 per cent and growth in assets and advances at 17-18 per cent. “Credit growth will not be beyond 18 per cent this financial year as the same has been a bit low in the earlier quarters,” he said. There was no stoppage in demand for credit but the customers were waiting for softening of interest rates.
“We have a large number of sanctions on hand but disbursements have not taken place because of this reason,” he said. On the bank’s foreign currency loans, he said SBI would not be majorly affected due to recent currency fluctuations as it would ask borrowers to hedge the foreign currency component or to take other alternate security at the time of loan sanction.