India’s largest lender State Bank of India reported a dismal Q4 earnings with profits sinking 66 per cent quarter-on-quarter as it wrote off bad loans. But the stock surged as investors applauded corrective measures to tackle the menace of NPAs. Speaking to Bloomberg TV India , SBI Chairman Arundhati Bhattacharya says four major sectors — infrastructure, iron and steel, construction and textile — are still in stress and increasing banks’ NPAs. Loan growth should be in the range of 13-14 per cent this fiscal year, she said.

What are the highlights of January-March quarter? What really stood out to you in terms of the entire balance sheet clean-up process? How effective has it been?

We had a profit of ₹1,200 crore in Q4, which is about 66 per cent down quarter-on-quarter. One of the main reasons for this has been that the slippages have been pretty high — around ₹30,000 crore. So, our gross NPAs have gone up to around 6.5 per cent from 5.1 per cent sequentially. As a net result of this, loan loss provisions have also gone up by 143 per cent quarter-on-quarter. But if you look at other parameters, we have gained market share in deposits. Our CASA (current and savings account) ratio has gone up quite a bit, by 93 basis points. Our advances growth has also been quite steady at around 13 per cent. In respect to our home loan, we have done very well. We have gained market share in home loans and in auto loans. We have brought down the NPA numbers in home loans and auto loans.

After a very long time we are seeing NPAs at sub-7-per cent level in agri loans. So in case of personal loans, agri loans and SME loans, the NPAs kept steady and in fact they have reduced. So overall in all of these areas, we have done very well.

We have also done very well in our digital initiatives. Many of the digital initiatives that have been rolled out have received a lot of traction. Be it the wallet or the apps that we have launched. SBI Quick, SBI No Queue and SBI Samadhaan have seen quite a lot of downloads from app stores and uniformly they have been rated from 4 and above. So there also we have seen quite a lot of traction from new-generation customers. We have done very well in financial inclusion too and currently have an access of ₹8,000 crore deposits in such accounts.

SBI has completed Asset Quality Review (AQR)-related provisioning, but assets worth ₹31,000 crore are still on the watch list. Can help us understand about your current provisioning and what can be expected over the next two quarters?

Over and above the AQR itself, we have classified almost ₹20,000 crore of assets. However, there are still some amounts of weak accounts, which we have put under special monitoring. Those are in the range of ₹31,000 crore. We also have some floating provisions to the extent of ₹3, 300 crore for these. We also have unused ₹1,100 crore counter-cyclical provision for which RBI permission has not yet come. To that extent, some amount of provision for this ₹31,000 crore also exists. Regarding provisioning going forward, it will be done on the basis of RBI instructions. But we don’t expect to see anything that is extra-ordinary or out of the way in provisioning for these assets.

How much of fresh slippages have you seen in Q4? And what is your outlook on the NPA situation going forward?

Fresh slippages have been in the range of ₹30,000 crore this time, out of which ₹9,000 crore is on account of AQR-related accounts and ₹1,000 crore is on account of other personal loan, agri and SME accounts. The rest of it has basically been for large corporates. Wherever we have seen weakness, we have gone for (NPA) classification.

Can you name the sectors where you are seeing the maximum NPAs?

NPAs are all stressed. I cannot say that the stress is more in one place and less in another. At the end of the day it is account-wise and all of these accounts that were non-performing are obviously stressed. At this point of time the four major sectors where we have maximum stress are infrastructure, iron and steel, construction and textile.

Given the current scenario, what kind of loan growth are you expecting in FY17?

Loan growth should be in the range of 13-14 per cent this fiscal year.

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