While SBI reported a 10.3% growth in credit for the second quarter, its 25% rise in net profit was mainly supported by other income. Speaking to reporters, chairman Arundhati Bhattacharya said the bank is beginning to see the end of the NPA cycle and the project pipeline, that mainly comprised renewable projects and brownfield so far, now also has road sector projects. Excerpts:

What is your outlook on credit growth?

Though the economy is on the mend, it still needs to move up a little more quickly before we see stability. Slippages are down sequentially as well as y-o-y and, therefore, we believe that we are now getting to the bottom of the pile, so to speak. So, going, forward the prognosis should be good.

However, I put a caveat that there are still one or two large accounts where we are doing workouts — if they happen, they happen; if they don’t, we may still have to take those hits.

Nevertheless, I would like to assure you that even in those accounts, the assets are very good. Even if there is a hit, it would be temporary and will not be something that would extend over a period of time. So, overall I think, we are beginning to see the end of the entire NPA cycle and I am more confident about the quality of assets, going forward.

Basically, I am referring to the perceived downturn in the economy. We are definitely seeing some movement upwards and this is also born out of the fact that the project pipeline, which mainly comprised renewable projects and brownfield, has new projects from the road sector as well. So, definitely, we are beginning to see some more traction in the project pipeline.

How many accounts were refinanced under the 5/25 scheme in the quarter?

This is not a restructuring, but a refinancing number. Still, the number of accounts under that was six and the amount was R3,916 crore. ARC sales in this quarter were only worth Rs 400 crore. Though we invoked SDR in two accounts, we haven’t completed any. They are from the steel sector and would be around Rs 3,000 crore. There will be more, but it is difficult to tell how many will get done during the quarter.

Frankly, 5/25 is not something we track in this manner, mainly because these are completed projects and have established cash flows that we are refinancing.

What are the reasons for a 35.6% growth in non-interest income?

In the non-interest income, there is a one-time extraordinary profit. The amount is R485 crore and has come as a result of the repatriation of profits from abroad.  The profit on sale of investments is R1,494 crore, out of which Rs 1,000 crore is on account of churning of the G-Sec portfolio.

How will the discom restructuring affect SBI?

Our exposure to discoms is around Rs 16,000 crore, of which only Rs 7,000 crore is to the eight stressed entities.  Even in this Rs 7,000-crore exposure, there has been absolutely no default from one of the discoms; the escrow account is with us and we have been receiving payments quite promptly.

So, our exposure to discoms is not actually a bad portfolio. There were extensive discussions with the banking sector — which we were a part of — on how to bring about the package and the amount of work that was done to bring all stakeholders on board is something we have not seen in the past. It took a huge amount of time and effort from all stakeholders.

We believe that this will give a lasting solution because, at the end of the day, the discom debt will get added to the state debt, which is important.