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Prashant Kumar, CFO and Dy. MD, SBI
Jan 18, 2019 | Source: Livemint
Thoughts on the MUDRA scheme: The MUDRA loans scheme is for micro, small and medium enterprises (MSME). Mr. Prashant Kumar, the Deputy MD and CFO of SBI said that in the past there has been a little higher percentage of non-performing assets (NPAs) in the MSME. The issue is that this is one sector where the banks need to upgrade credit underwriting standards using technology and have better monitoring and collective mechanism. This is, however, not an issue which is very critical or bad for the bank. But all banks need to improve in terms of financing the MSME sector.
On SBI’s own exposure to the micro segment as part of the total book: The CFO & Dy. MD said there at SBI they are not seeing any stress on this part of the portfolio and also that it is not like any elevated stress in the sector. If one sees SBI’s book, it is a very small percentage of the total book and NPA levels are still higher, almost 8-10% in the MSME sector. So, no further increase in NPAs in this segment is expected going forward. Rather SBI will be in a position to control it better. For MSME sector, SBI’s total book is around ₹2 trillion out of total book size of almost ₹21 trillion. So it is hardly 10% of SBIs loan book.
On growing NPAs from MSMEs in the overall industry and provisioning: Mr. Prashant Kumar said that SBI is not expecting any further high default and it is making adequate provisioning. If one sees last quarter SBI was 54% for the provision coverage ratio and the corporate book was 58%. At the bank the team will make adequate provisions during the coming quarters depending on requirements.
On equity fund raising: SBI already has a nibbling provision to raise equity, CET 1 of ₹20,000 crore, but the size of the issue and the timing would depend on the market conditions in the coming time. Then we will take a call at an appropriate time regarding the size and the timing.
For views on power sector: One does not know whether any write back will happen. But definitely, it is a work in progress and in coming times, we will see the resolution in some of the power sector accounts under Samadhan which would definitely reduce our gross and net NPAs. Currently about 3 to 4 of the stressed power projects are under Samadhan and are at an advanced stage of resolution. At SBI the team hopes that these will be resolved in the current fiscal year before March. However, there are many issues which sometimes come up. But we are hopeful that it should happen within this quarter said Mr. Prashant Kumar, CFO & Dy. MD at SBI.
Outlook on growth and credit offtake in FY2020: Mr. Kumar said, that if one looks at the industry, credit offtake is growing at almost 15% plus and SBI is also growing at the industry rate. The way SBI is seeing growth in all sectors, including retail and corporate, during next year also it would be good for the banking industry. Thus a growth of around 12% can be seen in FY2020 in the opinion of the CFO of SBI.