ET :13 JUL, 2012, 11.15AM IST, SIMRAN GILL,ET NOW
Asset quality concerns linger on for the country's largest lender, State Bank of India. According to sources close to the development, SBI will see another quarter of high non-performing asset (NPA) levels, while restructuring is also expected to remain at elevated levels.
SBI is expected to book NPAs in excess of Rs 4500 crore for the quarter ending June 30. The bank had a net NPA position of Rs 15819 crore as of March 31, 2012.
The bank is also expected to have restructured loansworth Rs 3000 crore during the quarter.
Two of the larger accounts - ARSS and Surya Pharma - will together contribute close to Rs 900 crore of NPAs for the bank this quarter. Corporate debt restructuring for these two accounts has already been approved but the implementation is expected to take place only in September, according to a source.
As for restructuring, while some accounts like Bharti Shipyard and Hotel Leela are already known, other accounts include microfinance players Equitas and Spandana. A number of textile companies have also been restructured, chief among them are JCT, Pratibha Syntex and Punjab Chemicals. "Most of these accounts are performing well following the restructuring and payments have been on time," said a source close to the story.
Another large account, Moser Baer Solar Power where banks have a total exposure of close to Rs 4000 crore is still under consideration for restructuring.
Sectors like construction, textiles, iron and steel are still facing huge amounts of asset quality stress. According to sources, "the main point of stress has now shifted to mid-sized and small corporate clients, while down-the-line operators like road and power contractors are also feeling the pinch."
Even so, SBI may have a better time as far as asset quality is concerned in the second quarter, with the bank expecting write-backs to the tune of Rs 1500 crore on account of upgradations and recoveries. Though the pace of NPA accretion is on the rise for SBI, the bank's top management has maintained that restructuring is more of a benefit than a drag on the bank's books.
In a recent interview to ET NOW, the bank's chairman Pratip Chaudhuri said, "the high levels of restructuring are not worrying, since all the accounts we restructure are those that we see as capable of being nursed back to health. We have seen just 12-15 % of our restructured loans slip into the NPA category."
SBI is expected to book NPAs in excess of Rs 4500 crore for the quarter ending June 30. The bank had a net NPA position of Rs 15819 crore as of March 31, 2012.
The bank is also expected to have restructured loansworth Rs 3000 crore during the quarter.
Two of the larger accounts - ARSS and Surya Pharma - will together contribute close to Rs 900 crore of NPAs for the bank this quarter. Corporate debt restructuring for these two accounts has already been approved but the implementation is expected to take place only in September, according to a source.
As for restructuring, while some accounts like Bharti Shipyard and Hotel Leela are already known, other accounts include microfinance players Equitas and Spandana. A number of textile companies have also been restructured, chief among them are JCT, Pratibha Syntex and Punjab Chemicals. "Most of these accounts are performing well following the restructuring and payments have been on time," said a source close to the story.
Another large account, Moser Baer Solar Power where banks have a total exposure of close to Rs 4000 crore is still under consideration for restructuring.
Sectors like construction, textiles, iron and steel are still facing huge amounts of asset quality stress. According to sources, "the main point of stress has now shifted to mid-sized and small corporate clients, while down-the-line operators like road and power contractors are also feeling the pinch."
Even so, SBI may have a better time as far as asset quality is concerned in the second quarter, with the bank expecting write-backs to the tune of Rs 1500 crore on account of upgradations and recoveries. Though the pace of NPA accretion is on the rise for SBI, the bank's top management has maintained that restructuring is more of a benefit than a drag on the bank's books.
In a recent interview to ET NOW, the bank's chairman Pratip Chaudhuri said, "the high levels of restructuring are not worrying, since all the accounts we restructure are those that we see as capable of being nursed back to health. We have seen just 12-15 % of our restructured loans slip into the NPA category."
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