Just three accounts can help SBI recover over Rs 16,000 crore this year, said Rajnish Kumar, Chairman at SBI. In an interview with ET NOW, Kumar said that his bank is waiting for the resolution plan by DHFL. Excerpts:

Can you give us a break-up of your June quarter slippages?

There were two or three major hits. The first is an account which got classified as NPA from the entire banking system one bank could not complete all the documentation in time. There is no doubt that everything is fine for that account and that the recovery is a normal repayment recovery. The pedigree, which cannot be doubted that itself is Rs 2,000 crore.

In agriculture loan segment, we had a problem in one state, where our gross slippages went up by almost Rs 2,000 crore. But such slippages in agriculture are usually higher in the first quarter. We have SME slippages of Rs 1,500 crore. Last year, we had the benefit of restructuring and forbearance on asset classification, which was also not available this time. The stress in SME sector is still visible. Overall, out of our Rs 16,000 crore-odd gross slippages, Rs 2,000 crore can be attributed to a special account. The retail segment, which includes agriculture and SME, also had slippages. Therefore, at least Rs 4,000 crore slippages were because of situations I will consider exceptional.

Your provisioning is in line with the recovery estimate for the year. Do you have an estimate? What sort of recoveries are you expecting especially from the NCLT accounts?

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In many NCLT accounts, either the orders have been passed or are in execution stage or the order is pending. At least the order part it will happen within this quarter. It is a matter of time. In fact, three accounts will help us recover Rs 16,000 crore this year.

We have got the order in one such case this week. We have another account where we will recover another Rs 800 crore. The recovery scenario this year looks good for NCLT accounts because many of these accounts are old accounts (more than 600 days). The way to look at it is that I see fresh slippages to be below 2 per cent this year. That is what our internal calculation is. The credit cost – considering legacy and fresh slippages – should come down to 1.4 per cent at the end of the year.

You have raised concerns over financing to auto dealers. What measures are you taking to deal with the situation? What impact the ongoing slowdown in auto sector is having on your business?

In case of dealer financing, the bank is very supportive. We have realised that such situations do arise. If there is a temporary buildup of the inventory, we have no issue in financing it. If the cycle has become 70 or for 90 days from 60 days, we have no issue. Within that period, the inventory can be cleared up. We just want dealers to maintain discipline. We are not looking anything beyond that.

As far as the resolution of DHFL is concerned, we are seeing that mutual funds are in a grey area right now, where they are not willing to sign the ICA because of their regulatory concerns under SEBI. What sort of dialogues are you in with mutual funds?

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It is not specifically about mutual funds. Once we receive resolution plan by the company, it will be examined. There are different categories of lenders in terms of securities. Nearly 90 per cent of them are in the same book. They are holding the same securities, pari passu, with all other lenders. Whether they participate in the resolution plan, every lender or every class of creditor will evaluate the best option for them.

But are lenders persuading or trying to get mutual funds on board?

We have told them our view. Mutual funds’ exposure anyway is not very high. It is just Rs 4,000-5,000 crore. In my view, everybody should go for the resolution within the framework, which the bank has given. Everybody will evaluate and take decision in the best of interest.

We have the policy review next week. What is your expectation?

In the current scenario, there may a further 25 basis points rate cut because we need to revive the growth and the combination of monetary and fiscal policy can do that.





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