The State Bank of India Chairman, Mr Pratip Chaudhari, said 18-20 per cent of the bank’s total restructured loans could turn into non-performing assets.

Morgan Stanley, in a report, on Wednesday had flagged asset quality concerns in SBI.

As on March 31, 2012, the restructured loans of the bank stood at Rs 37,168 crore. Only 4-5 per cent of the total NPAs turn into eventual loss because of non-repayment, Mr Chaudhari had said while announcing the bank’s fourth-quarter and full-year 2012 results.

Morgan Stanley said the bank’s new gross and net non-performing loans are expected to increase by Rs 5,000 crore and Rs 3,000 crore, respectively, in the first quarter.

The country’s largest lender has cut loan rates to exporters by 0.50 per cent.

Speaking to reporters on the sidelines of a CII conference, Mr Chaudhari said the rate cut is effective from June 23.

Earlier, the Reserve Bank of India had increased the Export Credit Refinance (ECR) limit for banks to 50 per cent from the earlier15 per cent. This was expected to inject an additional Rs 30,000-crore liquidity into the banking system. ECR is a facility where the RBI refinances the banks against the loans they give to exporters.

SBI recently cut rates by up to 3.5 percentage points for corporate, micro small and medium scale enterprises (MSMEs) and farm loan borrowers.

Mr D. Sarkar, Chairman and Managing Director, Union Bank of India, said cutting interest rates for exporters is not a problem. However, the demand for exports from the US and Europe has been under pressure.

“Export credit rate is a function of demand from exporters. If rate cut can be compensated by sufficient volumes, then the bank will not have any problems in cutting rates.”

>satyanarayan.iyer@thehindu.co.in