The country’s largest lender, State Bank of India (SBI), has created a new general manager (GM) position in its mid-corporate group dedicated to deal with loan restructuring.
Shyamal Acharya, deputy managing director, of the mid-corporate group at SBI, said the GM will focus solely on the the timely identification of accounts to be restructured and bring in a more hands on approach to monitoring and following up of restructured accounts. ?We created this position about a month back in view of the rising concerns over restructured assets. Loan restructuring has become a critical area of focus,? he said.
Acharya, who took over the responsibility of DMD of the mid corporate group in November, did not name the official who took over as GM for restructuring.
SBI’s mid corporate group has also introduced some changes at the chief general manager (CGM) level to increase focus on asset quality and loan growth.
The mid-corporate group now has two CGMs compared to the just one CGM structure that was previously being followed.
?There are 10 mid-corporate regional offices in the country whose responsibility has now been equally divided between the two CGMs. So, the span of control is brought down and the follow up on accounts is better,? he said.
Of the R40,454 crore outstanding restructured accounts at the end of the September quarter, around 62% or R25,022 crore of the restructured assets were from the mid-corporate group. Also, of the R8,495 crore worth of slippages seen in the July-September quarter, the largest portion of R3,666 crore was from the mid corporate group.
The net stressed assets (net non-performing assets + restructured asset) to advances ratio for the mid-corporate group stands at around 20%.
Within the corporate sector, the segments with the largest NPAs include textiles (R3,417 crore), iron and steel (R2,942 crore), aviation (R1,312 crore) and engineering (R1,897 crore).
As a result of the increasing NPA woes in the mid-corporate segment, SBI has gone slow on lending to the segment. The loan book in the July-September quarter stood at around R1.7 lakh crore compared to R1.68 lakh crore at the beginning of the year.
Acharya, however, said that the bank will, henceforth, look to be more aggressive in loan growth. ?Over the last few quarter, we had become cautious, but are now rethinking our strategy since we need to do business. There is demand emerging from certain pockets like the public sector units and we are looking to tap into these opportunities,? he said.
The mid-corporate group includes loans to companies with R50-500 crore of annual revenues.
However, Acharya said that this is a flexible definition and not always adhered to. Aviation companies like Jet Airways and Kingfisher Airlines falls under this group. Other companies like the Nuclear Power Corporation and National Fetilizers have also borrowed from the mid-corporate group.
The largest number of SBI loans that is being restructured in the CDR cell comes from the mid-corporate group.