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Country's largest lender State Bank of India (SBI) today said it expects to register a lower loan growth rate of 16% for the current fiscal as the demand for advances from the industrial sector is "weak".
"...We would like to believe that the loan growth should not be above 16% and deposits growth between 14 and 16% (in 2013-14)," SBI Chairman Pratip Chaudhuri told reporters here today when asked about his projections for the ongoing fiscal.
"...We feel the loan environment is rather weak and hardly any demand in the industrial sector so whatever loan demand is coming is from consumer sector," he said.
He also attributed the expectation of lower growth in advances to the increasing demand from corporate sector opting for dollar loans.
"Dollar loans are becoming cheap. Many of the corporates who are thinking of long-term loans for their projects are increasingly preferring dollar loans. Dollar loan pricing is going down every year but rupee loan pricing is not going down. Demand for rupee loan from corporate sector is weak Therefore, we are pegging (loan growth) at 16%," he said.
Last fiscal, SBI posted 21% and 15% growth in advances and deposits, respectively.
Chaudhuri said the bank would announce its financial results on May 22.
Upbeat over the growing demand from housing sector, SBI chairman said the bank was aiming for 25-30% growth in housing loans at Rs 30,000-35,000 crore in current fiscal.
He said about 25% of bank's total housing loans are 'takeover loans' which are also boosting growth in outlay for housing and the NPA (non-performing asset) level in this sector was less than one%.
Noting that NPAs were the bank's biggest challenge at this juncture, he said that default in loan repayment was found mostly in SME, mid corporate and agriculture sectors because of "difficult" market conditions.
He also said that textile sector, some steel companies and those which supply products to electricity boards and contractors were facing liquidity and profitability problems.
Chaudhuri said the gross NPA could be 4.5% and net NPA 2%.
Asked about the liquidity problem, SBI Chairman said the bank was not facing any liquidity crunch. "Liquidity crunch is not for us, we have an excess of liquidity... As of today we have Rs 40,000 crore of excess liquidity," he said.
