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State Bank of India has said that the bad debt situation is improving, but there is no magic wand to deal with it. The public sector bank’s bad debts rose to ₹61,605.35 crore or 4.95 per cent of total advances at the end of March, from ₹51,189.39 crore or 4.75 per cent in 2012-13.
When asked about the current situation, the Chairperson of the bank, Arundhati Bhattacharya, said, “We are seeing some lessening of stress but...there is no magic wand, we have to work our way through. As the GDP goes up, and demand goes up, the capital market will begin to respond. Once people are able to raise equity, we will see things becoming better.” She was addressing the media after inaugurating SBI’s digital branches.
Elaborating on this, Pradeep Kumar, MD and Group Executive (Corporate Banking), SBI, said one of the customers, a power company, came out with a qualified institutional placement (QIP) and it was subscribed twice, while another power company is coming out with a QIP.
“A couple of EPC companies are also planning rights offerings and I have talked to some private equity investors in these companieswho are also willing to participate in these offerings. I think the market is slowly beginning to respond to growth. I think this is a big plus for the banking industry,” he said.
Bhattacharya said the bank has to work on multiple kinds of solutions. “We will do all we can take. The fact is that we are very much in control; we know what is going wrong and where. We know what is to be done. We are trying to address those issues,” she said.
Interest rates On interest rates, Bhattacharya said it was stable at this point. Asked about fund-raising plans, she said, “I don’t need it. I will have to check credit growth and then decide (in) another four months. We would need it should there be lot of demand for credit.” Once credit demand picks up, she said, “We have lot of options, including rights, QIP and FPO, so everything is on the table. At this point in time, we have not finalised anything.”
SBI raised ₹8,032 crore in January by selling 5.13 crore shares through a QIP.
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