"Stress in our agri portfolio in Q1 will not be so much because of the monsoon deficit as that does not translate into stress so quickly, but definitely on account of the proposed debt waiver (in Andhra and Telengana) yes," SBI Chairperson Arundhati Bhattacharya told reporters here late this evening after the bank's 59th annual general meeting.
She was answering to a question on the impact of the proposed farm loan waivers, running into over Rs 1 lakh crore in Andhra Pradesh and Telengana by their newly-elected chief ministers N Chandrababu Naidu and K Chandrasekhar Rao.
While the agri loan book in Andhra is worth Rs 87,000 crore, the data for Telengana is not immediately available. Bhattacharya said already the issue has created problems in Telengana and Andhra as people have stopped paying the dues.
On the overall non-performing loans in the banking sector, she said with the improvement in the macroeconomic environment and an expected revival in growth, should mitigate risks and resolve problems of asset quality.
"This stress is lessening and so hopefully going forward the number should start looking better," said Bhattacharya, who for the first time in the history of the over 200-year-old bank had sold Rs 3,500 crore NPAs to asset reconstruction companies (ARCs) last quarter.
She also said the bank may sell around Rs 3,000 crore more of bad loans to ARCs in this quarter.
The bank's year to date loan growth is around 13 per cent and it is targeting a growth of 15-16 per cent this fiscal.
"I continue to stick to it (15-16 per cent loan growth in FY15) because even though we are hopping that growth will come back, but for it to translate into credit books of the bank will take time. Maybe, in the last quarter we may see substantial pick up, and if not, definitely in the first quarter of the next year," Bhattacharya said.
She said with improvement in macroeconomic condition and rise in profitability, the bank will try to meet its fund requirement internally rather than from other avenues.
However, she said although internal accruals is a good source of getting capital it cannot be the only source. "So, we will have to look at other sources."
Last year, the bank raised had Rs 8,032 crore through qualified institutional placement and Rs 2,000 crore via tier-II bonds.
Bhattacharya said the bank is well-capitalised for now and does not require funds currently but will look at when the credit growth picks up.
"I have a lot of room in additional tier I, tier II. Regarding the common equity tier I, I can look for rights issue or follow-on or a QIP. So, all of them are on the table. But at this point capital is not of a very primary importance," Bhattacharyya said.
SBI's capital adequacy ratio stands at 12.44 per cent.