As the Reserve Bank of India’s financial stability report projects a spike in non-performing assets in the banking sector in 2020, State Bank of India does not expect its gross NPAs to rise significantly.

“We do expect some kind of headwinds from certain corporates. Since we started providing those NPAs, I don’t expect that it will have a significant impact," said Dinesh Kumar Khara, managing director, SBI.

"For quite some time, we have been practising a policy wherein we are providing upfront and ensuring that the shock of such an event should be the least possible for the balance sheet,” Khara said in an interview with CNBC-TV18.

The central bank report estimated that the gross NPA ratio of banks

may increase to 9.9 percent by September 2020 from 9.3 percent in September 2019. The gross NPA ratio of banks stood at 9.3 percent in March 2019.

The report said state-run banks' GNPA ratios may increase to 13.2 percent by September 2020 from 12.7 percent in September 2019, whereas for private banks it may climb to 4.2 percent from 3.9 percent, under the stress scenario.

Exposure and recovery

SBI has set a recovery target of about Rs 33,000 crore for the fiscal year 2020 and has already recovered about Rs 25,000 crore so far, said Khara. "Additional Rs 8,000-10,000 crore, we are quite hopeful that we will be in a position to meet the target for the recovery this year.”

“Right now the telecom space is going through some kind of a readjustment process and hopefully there will be a way forward for various challenges which the sector is facing. So I think there will be some orderly resolution which we expect in the telecom sector also,” he noted.

Loan growth and margin

Khara said the bank's retail loan growth has been decent in FY20 and is expected to remain steady but corporate loan growth has been generally muted.

"We have observed that even our working capital utilisation also is around 70 percent. That is a clear reflection that it is not merely the sanctioning but it is also the availing of the credit by the corporates, which is coming in the way," he said.

SBI estimates loan growth of about 7 percent in FY20. “In the second quarter of 2021, we should see early greenshoots forming up and we should see better growth in the corporate credit,” Khara further added.

SBI does not expect any impact on the margins since the deposit rates and the lending rates are linked to the marginal cost of funds based lending rates, he said.

First Published:Dec 30, 2019 1:23 PM IST