New Delhi, Feb 28 (IANS) The State Bank of India, the country’s largest lender by asset size on Thursday, said the NPA recovery of the bank is proceeding smoothly and it is posting strong credit growth.
“We are recovering well on NPAs (non-performing assets) and it is going to be an ongoing exercise. We have also streamlined our credit processes significantly last year which improved the underwriting practices,” Dinesh Khara, MD of State Bank of India, told IANS.
“Much of it is a function of various decisions we are awaiting from the NCLAT (National Company Law Apellate Tribunal),” he said while responding to a query if the SBI is expecting significant reduction in NPAs in the next two quarters.
On a query if the recovery from Essar Steel and Bhushan Steel & Power does not happen in the current fiscal, he said that other mechanism of recoveries are also working very well. “We have a stressed asset vertical which focuses and ensures on resolutions and is very active,” he said.
The total of claims admitted by the lenders in Essar Steel and Bhushan Power & Steel are Rs 49,473 crore and Rs 47,148 crore, respectively.
On the lending of the bank which is seen as a trend by the industry, Khara said credit off take is fine for SBI, “but on industry, we expect credit off take to pick up”.
The SBI recently delivered strong Q3 numbers as loan growth accelerated and asset quality improved. On asset quality front, slippages to NPAs reduced substantially while there was strong pick up in loan growth, especially corporate advances. The profit was aided by strong loan growth, better margins and write back of investment provisions.
Last month, the bank put its entire loan of Rs 15,431 crore to Essar Steel on sale, amounting to a haircut of more than a third on the sum due despite the case being under resolution. The SBI’s willingness to accept the haircut suggests the lender is running out of patience with the delay on resolution of the company’s outstanding debt.
The SBI has a 12 per cent growth in total advances y-o-y, net NPA at 3.95 per cent, and provision coverage ratio for bad debts at 75 per cent as on Q3.