State Bank of India on Friday reported a 35% y-o-y fall in its net profit for the September quarter and slippages of R10,341 crore. Arundhati Bhattacharya, chairman, spoke to reporters on a host of issues. Excerpts…
Where does you watch list stand and what kind of slippages are you expecting from that list?
We have said that slippages will be around Rs 40,000 crore and what we are saying is that slippages from the watch list and the restructured book are still ranging between 75% and 80%. Therefore, around 25% will be outside the watch list. To that extent, the watch list at Rs 25,951 crore will probably go down by another Rs 5,000-7,000 crore. However, if we start seeing more resolutions, some of this watch list numbers will come down. The standard restructured book at the end of September was R36,570 crore.
There will be some outside the watch list as there is large number of small-value accounts. There will always be some good accounts which will slip. I think in this quarter, two very good accounts slipped.
What is your outlook on recoveries and resolutions?
Actually recoveries will pick up speed because now there is more clarity and visibility on resolutions going forward. The Reserve Bank of India on Thursday announced certain changes in the SDR, S4A and the 5/25 guidelines which will give us a certain extent of flexibility as many accounts which were outside the eligibility norms can be included. So, I think these changes will lead to more resolutions.
I will definitely say that visibility is much greater regarding resolutions of many large-value accounts. Actually, a number of new players have come up, who are into operations and management. So, even where we are not able to get a buyer we can do the conversion of debt to equity and put an O&M player. That will also give us a lot of comfort going ahead. On the resolution front, we are definitely much better than we were even a quarter back.
How is SBI coping with the currency demonetisation?
There is adequate amount of pay-in slips, the special pay-in slips required to exchange currency notes. We are also helping people who want to open accounts as there are a large number of customers who do not have accounts but have money to exchange. We have opened separate account opening counters and will continue to handle them. You must understand that this is a huge exercise and the initial movement of cash that we did in the night of November 8 is now drying up and so more cash has to be sent. That is being constantly done but we have to wait for certain amount of security measure. We have got all of our on-site ATMs and cash deposit machines working.
Practical problems are that most ATMs have a configuration of just 1cassette of Rs 100 rupee notes and one cassette has just 2,500 notes which get over soon. Hence, more cassettes are required to be added and such configuration of ATMs takes three people and that too by going to the ATM site. It cannot be done as a back-end operation. We have already evacuated, now configuration is on and then we will start loading other ATMs.
What is your outlook on credit growth?
There are too many uncertain things in the third quarter and it is very difficult to give an outlook. I had thought that second quarter credit would be better; credit sanctions were actually pretty good but disbursements did not happen. We have done some adjustments like trying to see which are the better performing assets and are trying to concentrate on those assets. Along with that is the demonetisation impact. So, it is difficult to say what will be the achievement at the end of the quarter.
In the second quarter, loan growth was very slow for various reasons. We have also internally taken the decision on not really increasing our exposure to those areas where peripheral business is not there. To that extent, we will stick to our original target of between 11% and 12%. At the end of the third quarter, we will try to give the guidance whether we can come up to that level.