India's largest banker State Bank of India is selling off its non-performing assets (NPA) of around Rs 3,500 -4,000 crore for the financial year 2013-14 to asset reconstruction companies (ARC).
"We are selling NPA between Rs 3,500-4,000 crore of NPA," SBI chairman and managing director Arundhati Bhattacharya said last evening at IIM Calcutta.
SBI has total bad assets of Rs 67,799 crore. It had reported 5.73 per cent of its assets as bad loans in the October-December quarter.
It had said earlier that there were 14 ARCs functioning and many of them had been invited to pick up stressed loans.
Normally ARCs pay 5-10 per cent of the total bad loans being bought in cash and the rest could be security receipts (SRs). This helps †banks to take the equivalent NPA figure out of books and make an yearly provision for recovery or actual
"We will make yearly provisions and adjust it on mark-to-market basis," Bhattacharya said.
She said that the first quarter outlook for 2014-15 would remain sluggish and there would not be much credit growth.
Regarding predictions of a poor monsoon because of the El Nino effect, she said "Let us keep our fingers crossed on the prospect of monsoon this year. But one thing is reassuring the ground water levels stand sufficiently recharged by the last rains."