State Bank of India welcomes the idea of a national asset management company that will take over bad loans and help revive stricken units, but doubts its feasibility. Arundhati Bhattacharya, SBI Chairperson, said here that the new company was an idea floated by the Finance Ministry and remains just that.
No serious thought had been given to it, Bhttacharya said, and pointed to a number of imponderables. Of these, the first is the issue of who provides seed capital for the new institution. And, second, the issue of what she called the ‘management bandwidth’ to handle the heap of bad loans.
Existing asset reconstruction companies have specialised in acquiring parts of these loans and selling them off, but not necessarily reinvigorating the sick units concerned. The general liquidity position also will have a bearing on the formation of the company, Bhattacharya said.
The SBI chief was here to take part in a CSR function hosted by associate State Bank of Travancore (SBT) in which a computer lab was set up in a government vocational school.
SBI currently sets apart one per cent of its profits for corporate social responsibility (CSR) efforts, but does not mind it raising it to two per cent as other companies are required to.
The bank does not have to mandatorily do this since it has been set up by a statute of Parliament. But that does not prevent it from setting apart incremental resources for CSR.
Responding to another question, the Chairperson said that the bank was proceeding to set up cost-effective electronic surveillance of its ATMs.
“We have floated tenders and a few vendors have made their presentations,” she said. For banks, electronic surveillance of ATMs is the way to go, she added.