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State Bank of India (SBI) will put in all efforts in FY22 to keep up the momentum of recovery made in stressed assets in FY21, according to Chairman Dinesh Kumar Khara.
This will be aided by the roll-out of pre-packaged insolvency for resolution, resumption of courts and formation of National Asset Reconstruction Company Ltd (NARCL).
India’s largest bank will make judicious use of all recovery options at its disposal, he said.
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“We can wait and watch for some more time before making any comment on impact of lockdown on economy and NPA situation”However, Khara underscored that it is too early to call a possible deterioration of asset quality in banks due to the second wave.
“The Bank over the last two financial years was dealing with a steep rise in stressed assets. All-round effort in managing stressed accounts initiated in FY2019 was carried through in FY2020 as well.
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Net profit jumped to ₹6,451 crore from ₹3,581 crore“However, the outbreak of the pandemic and subsequent lockdown in FY2021 altered the dynamics of stressed asset recovery. Bank had to grapple with disruption in normal proceeding at NCLT due to Covid-19 infections,” the SBI Chief said in the latest annual report.
Furthermore, the Reserve Bank of India (RBI) mandated a standstill clause for some portfolios.
Reduction in NPAs
“Despite all this, the bank was able to achieve a reduction in the level of Gross NPAs (non-performing assets) by ₹22,703 crore by March 2021.
“The corporate segment saw the largest reduction in NPA at ₹18,530 crore, while other segments remained more or less stable,” Khara said.
The gross NPA ratio of the Bank accordingly declined to 4.98 per cent from 6.15 per cent last year.
Khara said SBI is comfortably placed in terms of growth capital.
“Opportunities for lending in promising sectors will be explored to diversify the portfolio and contain risk,” he added.
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