The State Bank of India (SBI), which reported a 99% drop in profits in the three months to March 2011, has exceeded prudential limits while lending to Reliance Industries Limited (RIL) and Indian Oil Corporation (IOC) for the third straight year, the bank?s report for the financial year 2010-11 states.
The bank?s exposure to a single borrower was in excess of the prudential limit in the case of RIL, IOC and Bharat Heavy Electricals Limited (Bhel), the report notes adding that in the previous financial year, too, SBI had lent more than it ought to have to these three companies as also the Tata Group. In 2008-09, the bank breached prudential lending limits for RIL and IOC. However, the loan outstanding to RIL came down to R5,645.44 crore on March 2011 from R14,659.35 crore in the previous year.
As per the Reserve Bank of India (RBI) regulations, the prudential limits in the case of a single-borrower are 15% of capital funds while for a group borrower it is 40%. However, the credit exposure to a single borrower can go up to 20%, if the additional exposure is on account of extension of credit to infrastructure projects. In the case of a group borrower, the exposure can be increased to 50% if the additional 10% exposure is for credit to infrastructure projects.
During the course of 2010-11, SBI breached the prudential limits on three occasions. For instance, between April 2010 and July 2010, sanctions to RIL was R15,815.48 crore as against exposure ceiling of R13,646.26 crore, for IOC it was R25,295.90 against a limit of R22,743.77 crore, while Bhel was sanctioned R16,544.75 against the prudential limit of R13,646.26 crore.
As on March 2011, SBI had total credit exposure to the tune of R10.85 lakh crore of which exposure to the telecom sector was R23,216 crore or around 2% of the total exposure. The bank?s total exposure to the infrastructure sector was R97,763 crore, of which about R30,000 crore was to the power sector.
Meanwhile, its exposure to the NBFC and trading space stood at R71,618 crore. In its analyst conference, the bank disclosed its exposure to the beleagured aviation sector was R4,500 crore while that to the telecom companies under investigation in 2G spectrum scam was R1,500 crore.
During the year, SBI?s advanced to large corporates grew 23.4% to R1.08 lakh crore, mid-corporate advances increased 19.4% to R1.57 lakh crore, while retail advances grew 22.04% to R1.64 crore, led by robust increase in home, auto and education loans, the bank said in its annual report. During the year, SBI?s advanced to large corporates grew 23.4% to R1.08 lakh crore, mid-corporate advances increased 19.4% to R1.57 lakh crore, while retail advances grew 22.04% to R1.64 crore, led by robust increase in home, auto and education loans, the bank said in its annual report. Shares of SBI closed down R20.65, or 0.91% at R2,242 on the National Stock Exchange (NSE) on Friday.