State Bank of India has sold non-performing assets (NPAs) worth ₹4,000 crore in 2013-14 to asset reconstruction companies.
The bank Chairperson Arundhati Bhattacharya told news persons, after an event at IIM-Calcutta,
“we had sold individual NPAs earlier, but not such a large portfolio.” “ARCs largely pay in the form of Government security receipts (SR). This helps a bank to take the equivalent NPA figure out of its books and make an yearly provision for recovery or actual cash payment. “We would make yearly provisions and adjust it on mark-to-market basis,” she added.
According to Bhattacharya, the outlook for the current financial year was “undetermined”.
After the poll, once the Government settles down then the determination of the macro economic policy contours could take place.
On predictions of a poor monsoon due to the El Nino effect, she said “let us keep our fingers crossed on the prospect of monsoon this year. But one thing was reassuring —the ground water levels stand sufficiently recharged by last year’s rains.”
Although cost of funds for banks are likely to go up, SBI will hold on to home loan rates.
“Home loan rates will remain as they are,” Bhattacharya said. The bank might see a muted growth in the Q1, she said. The Reserve Bank of India has kept the policy rates unchanged but lowered borrowing limit for the banks from the overnight facility. A lowering of borrowing limit is likely to increase cost of funds for the banks.
“Cost of funds will go up but we are not considering any increase in the home loan rates,” she said.
Bhattacharya said the bank is open to any idea for reaching a solution regarding Haldia Petrochemicals.
“We are trying to work out a solution and we are open to any idea that gives us a solution,” she said.
Earlier, Bhattacharya had said that the HPL asset will not turn bad. The company is making losses and is likely to report sick for erosion of net worth.