While the recent Reserve Bank of India (RBI) circular on increased provisioning for cases sent to the bankruptcy courts will impact State Bank of India (SBI), the country’s largest lender will be able to manage it “without much difficulty”, SBI chairman Arundhati Bhattacharya said on Tuesday. Speaking to shareholders at the bank’s annual general meeting (AGM) in Mumbai, she said the bank is doing everything that is possible to tackle the bad loans problem. She added that in line with the ordinance on non-performing assets (NPAs), the RBI has asked banks to take 12 such accounts to the bankruptcy court.
“Now in respect of these accounts, these have been NPAs for quite some time, and as a result, we have substantial provisions already for these accounts. The new circular on increased provisions will impact the bank. This is quite reasonable and is something we will be able to manage without having too much of difficulty,” Bhattacharya added. The central bank had recently told banks to provide at least 50% of the loans in cases being sent to the National Company Law Tribunal (NCLT) and provide 100% in cases that failed to be resolved within the deadline of the court and are subsequently sent for liquidation.
She explained that the bank has been making provisions as ‘prudentially’ as possible. “Many a times we are making a little more than what the regulatory demand is because we know that more of these provisions will be required,” she said. Bhattacharya told reporters that the 15 days’ time provided by the central bank to send the accounts to NCLT was over on Tuesday and the three accounts that were supposed to be referred within 15 days have been referred.
“In respect of the other three accounts for which we have time till, I think up to the 15th of the month, we will take them by that time, maybe a little earlier as well,” she explained. According to her, over and above the 12 cases mandated by RBI, there would be another four cases that have already been sent to NCLT.
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“There would be another few where others have gone to the courts and we are responding to it. Overall, I think there are around 20 cases in the insolvency courts,” she told shareholders. On Jio Payments Bank — a joint venture between Reliance Jio and SBI — she said that the bank is awaiting some RBI clarifications and will take another quarter to start operations. On the recovery of cases referred to the Central Bureau of Investigation (CBI), she said that they are very low because the CBI says that they are actually there in order to catch criminals, not to recover for banks. “Recovery for banks, they feel, should be done by the debt recovery tribunals and the resolution courts,” she said.