The Telegraph
Monday , January 6 , 2014
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Asset stress to haunt State Bank

Bhattacharya: Reality check

Mumbai, Jan. 5 (PTI): The State Bank of India — faced with rising stressed assets over the past two years — has said it does not expect to come out of the woods till the end of 2014 and an uptick in growth is central to the turnaround of the banking system.

“Even when I joined, I had said that I did not see anything (improvement in asset quality) before three quarters and I continue to maintain that. I don’t think you can see a turnaround that fast,” SBI chairman Arundhati Bhattacharya said.

On bad assets, she said some improvement might be seen after the forthcoming general elections but any concrete signals could come only towards the end of 2014.

“You would see the stress lessening when you see GDP growth going up. Till such a time, the stress is going to be there,” she said, adding that the revival of stressed projects is essential for the economy to revive.

Bhattacharya said she hoped that clearances granted by the cabinet committee on investment (CCI) would result in some loan demand by March as state-level approvals were likely to be secured by the companies over the course of this quarter.

The CCI, since last June, has cleared 128 large projects worth over Rs 4 trillion (Rs 4 lakh crore), while over 200 more projects involving more than Rs 14 trillion are still stuck for want of various approvals. After the approval, projects need certain state-level clearances as well. Hence, the tepid loan demand from companies even in the current busy credit season.

Till mid-December, credit growth was a poor 14.7 per cent, according to RBI data.

SBI’s net profit dipped 35.08 per cent to Rs 2,375 crore in the July-September quarter because of a 43.99 per cent jump in provisioning for bad loans at Rs 2,646 crore and a massive spike in pension coverage.

Bhattacharya, who took over in October before the second-quarter earnings were released, said the dip in profits and a surge in stressed assets was not because of a “clean up”.

The bad loan numbers represent a true picture of things at the bank and no “clean-up” has been done by her, she said.