SBI may raise PCR to 67%

State Bank of India is looking to increase its provision coverage ratio (PCR) to 66-67 per cent by early FY19.

According to Rajnish Kumar, Managing Director, SBI, the exercise of increasing PCR could be either achieved within this fiscal or may spill over to early next fiscal.

The bank’s PCR, which is measured by the quantum of funds set aside by it to cover bad loans, was higher at 60.79 per cent as on June 30, 2017, compared with 59.91 per cent the same period last year.

Gross non-performing assets (NPA) of the bank increased to ₹188,068 crore as of June 2017, against ₹137,662 crore during the same period last year. The percentage of gross NPA to advances also increased to 9.97 per cent (7.40 per cent) while net NPA increased to 5.97 per cent (4.36 per cent) as of June 2017.

“Provisioning needs to be done. Our PCR may go up to 66-67 per cent either by the end of this fiscal or spill over to early next fiscal,” Kumar told newspersons on the sidelines of a banking colloquium organised by the Confederation of Indian Industry here. The cost of provisioning for the bank is currently high at 2.4 per cent and has to be brought down.

“The high cost of provisioning will come down once asset quality starts improving and fresh slippages come down,” he pointed out.

Fresh slippages have started tapering off and going forward, slippages will be under control, he said.

According to Kumar, the cost of credit in the large corporate and mid-corporate segment is high compared with credit cost in the retail portfolio.

“In the retail portfolio, the credit cost is not high; but in corporate and mid-corporate segment, it is high as the level of non-performing assets is high, and the bank has to make provisions for stressed assets.”

The bank expects 6-8 per cent growth in credit in the current fiscal.

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