The huge provisioning by the bank in the last quarter of 2010-11 dragged down the profit by 99% creating a hue and cry. Why the bank had to go for such a massive provisioning in one quarter
It is possible that bank had not done adequate provisioning in the past. Also, the provisioning against the NPAs is done normally during the last quarter of a particular year. Most of the credit disbursements and restructuring of assets by the bank earlier had happened during the second half of the financial year. So it is natural that slippage and provisioning also happened during the period.
SBIs provisioning against pension had not been done since 2007. Out of the total provisioning of R11,000 crore against pension, a sum of R2,400 crore was taken from the profit and loss account of the banks balance sheet. Rest we had charged to our reserves.
Moreover, we had to provide against the special home loan scheme in the quarter. Overall, we have done, whatever is needed to be done, as per the prudential norms.
Going ahead what are your plans to control NPAs
Things are under control now on the NPA front. Some stress is seen, though. We are focusing on the recoveries in a major way. For the first time we have set up account tracking centres using both technology and human power.
We have got tracking centres for detection and early warning of such NPAs. In all, we have got 14 such centres. Each of them is located in all the 14 regional headquarters of the bank.
The job of these centres is to call up the borrowers and remind them of their outstanding loans and to tell them what are the advantages of repaying the loans in time.
Apart from that, we have formed regional resources teams (RRTs) as part of our recovery mechanism in rural areas for recovery of agricultural NPAs. The teams job will be to track agri-related NPAs. We are taking all the measures to keep our NPAs under check.
Still, let me tell you that there cant be a system where there is no NPA at all. Fresh slippage will continue to happen, but not to the extent what has been observed during the last financial year. We are waiting for the first quarter results to see improvement on the NPA front.
Will you now raise rates as RBI has hiked key rates
To some extent, we may think of absorbing the rate hike. But, if the deposit rate increases, it will directly affect our margins.
Do you think the banks net interest margin may come under pressure
We will be able to maintain it at its present level, though the fact remains that there could be some stress. At present, we have got a Casa base of 48-49%. But, it may fall as people are turning to more lucrative term deposits.
What are the banks business growth projection for this year
We have projected the credit growth target at 20-22% for 2011-12. But, it may get moderated and be in the range of 18-20% only. Similarly, we are looking at a deposit growth in the region of 20-22% during this financial year.
What kind of banks customers are borrowing at base rate
SBI now has 70% of its borrowers governed by the base rate. We are considering to impose reset clause on such loans where customers risk management can be assessed at some interval. But it is being discussed at a preliminary level.
What kind of branch and ATM expansion plans SBI has for 2011-12
We are looking at opening of 800-1,000 new branches during this financial year and 50% of that would be opened in the rural areas alone. We have got 25,000 ATMs for the entire SBI group as of now, including 18-19,000 ATMs with SBI alone. We have plans to open 8,000-9,000 ATMs during this financial year itself.