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State Bank of India (SBI), the country's largest lender, on Thursday said its farm loan portfolio has witnessed a rise in defaults on plans for an agriculture debt waiver scheme in Telangana and Andhra Pradesh.
"The payment discipline has been vitiated due to plans to waive off loans. At present, defaults are restricted only to these two states and hope it does not spread to other regions. The rise in defaults was not due to drought conditions," SBI Chairperson Arundhati Bhattacharya told reporters after its annual general meeting here on Thursday.
Earlier, Telangana Chief Minister K Chandrasekhara Rao had said the financial liability arising out of the debt waiver scheme would be around Rs 19,000 crore, way lower compared with the promised debt waiver size of Andhra Pradesh.
Commenting on overall pressure on asset quality, the SBI chairperson said stress in the system was less now and overall numbers should start looking better. However, some of the accounts are on edge.
The bank has sold non-performing assets (NPAs) worth Rs 3,000 crore in the quarter ended June 2014. SBI would continue to offload NPAs in each quarter. The amount could be lower as many large accounts had been dealt with, the SBI chief added.
The gross NPAs of the bank stood at 4.95 per cent at the end of March 2014, up from 4.75 per cent a year ago.
The bank posted credit growth of 13 per cent in the first quarter. It expects to grow the loan book 15-16 per cent this financial year.
Asked about capital plans, she said the bank is well capitalised at 12.44 per cent now. It has room to raise additional capital through tier-II bonds as well as use rights issue or institutional placement for equity offering.
In 2013-14, the bank had raised equity capital of Rs 8,032 crore through qualified institutional placement (QIP). The government had also infused Rs 2,000 crore in the bank.
