SBI chairman Arundhati Bhattacharya interacted with reporters in Kolkata on Friday in a question and answer session after the announcement of the bank’s March quarter results. Excerpts:
What is the size of the revised watch-list of loans that could turn bad? And of that watch-list what amount of loans comes from the associate banks? We have refreshed last year’s watch-list. Out of around Rs 32,000 crore of watch-list that we have given, Rs 9,800 crores pertains to associate banks, the rest is our own bank. So for instance, whenever certain projects that were under implementation last year, and have since been completed or are going to be completed this year, especially the power assets, which do not have PPAs (power purchase agreement), assets of that nature now found its place on the watch list. This is the overall watch list of the entity.
What kind of fresh slippages are you anticipating going forward?
What will be the slippage? It will be very difficult to give you a perfect number at this stage. One of the reasons again is that we would like to take this quarter to have a proper look at the associate banks’ books as well. Though we have done that very well, in spite of that I think we have to see one-quarter for trying to give any numbers of slippages. The only thing I can tell you that directionaly it is definitely slowing down.
Would SBI like to cut exposures in some sectors for risk mitigation?
I will not say we will stop exposure (to certain sectors) altogether. If the sector is weak, definitely this is something we will do after looking at a large number of times and to the extent possible, we will not be taking exposure out of those sectors. The entire operation in NCLT is now beginning to gather more pace. Either through NCLT or RBI route, we will find some way in order to take stressed accounts forward and resolve them. Please inform us of stressed asset sales to asset reconstruction companies (ARCs) during the March quarter and last fiscal. Sales to ARCs in Q4 was Rs 597 crore and for the full year, it was Rs 794 crore. Going forward ARC sales is always an option, but the fact of the matter is we must find right valuations.
What would be the impact of GST on your bank?
GST should be one of the key things because it is a very good extensive tax reform. And to the extent, it is expected to really contribute to the ease of doing business. It is something that is very material and actually can add to the GDP of the country. To that extent, it is a very seminal kind of reform. And obviously, we expect to be a part of it. Regarding the payment system that will be required in order to accept these taxes, SBI is ready. I think our testing with GST has been begun, it has already started.
We will be also within the purview of the GST as we are the giver of services. So to that extent, we will also be within the purview of GST and we will also have to pay some tax. So, there are a lot of preparations that we have to do internally because as you know cost of services is much more difficult than that of goods. There has to be a lot of software requirement within the company for this. So one or two quarters will be very difficult, but hopefully going forward we will be able to manage this issue.