State Bank of India does not foresee any exceptional bloating of non-performing assets or disturbance in capital adequacy after the proposed merger of five associate banks and Bharatiya Mahila Bank (BMB) with itself.
“We have gone through their capital adequacy, NPA positions as well as future liability on employee benefits. These figures not uncomfortable or burdensome,” SBI Chairman Arundhati Bhattacharya told newspersons here.
Given the combined strength of the balance sheets, reach and existing businesses of these five associate banks as also BMB, the additional capital, NPAs and statutory liability towards employees, such as provident funds and pension, would be at manageable level for the merged entity, she explained.
She estimated that the total employee-related liability of these banks would be around ₹4,700 crore for the proposed new entity.
She said SBI has sought the permission of the government (the promoter) and has been negotiating with the current management of the six banks.
Well-capitalisedBhattacharya said SBI was currently well capitalised and its capital adequacy ratio stands at 13.12 per cent.
As its Tier I capital was adequate to meet the current requirement, SBI does not propose to raise fresh capital this fiscal.
“In fact, if we consider the upside in real estate revaluation of ₹10,000 crore, the balance sheet strength goes up manifold,” she added.
She said the pipeline of project financing was much better today than a year ago. She, however, felt that the economy’s revival could be led by the enhanced government expenditure rather than expansion of banks’ loan book.