Troubled by the rise in stressed accounts in its agriculture and small and medium enterprise (SME) portfolios, State Bank of India (SBI) is working on setting up accounting tracking centres to monitor the troubled accounts, said a senior executive of the bank.
Along with mid-corporate segment, the agri and SME segments have been weakest as far as asset quality of the bank is concerned. The gross NPAs in agriculture and SME segments rose sharply from 6.37% and 5.34% respectively at the end of March 2011, to 9.8% and 7.2% respectively at the end of September 2012. SBI reported one of the worst quarters in terms of asset quality in the July-September 2012 quarter with slippages at 4.98%.
A Krishna Kumar, MD and group executive, National Banking, SBI, said a key lesson the bank has picked up from the recent surge in NPAs is the need to have a proper system of monitoring each and every loan. Over the last year, account tracking centres have been instituted in the retail segment in all 14 circles of the bank. Kumar said that in 70% of cases when the bank started calling the potential defaulter, the money came in immediately. ?Now the bank is looking to set up a similar structure for agri and SME loans too,? he added.
The account tracking centres will have teams focused on identifying accounts that have failed to pay loan installments for over 45-60 days. These accounts are followed by officers for recovery before they become an NPA. Loans turn into an NPA when payments are not made for 90 days. ?For loans which are monitored well, we might not be able to to recover every single paise but atleast you get warning signals much in advance and act on them quicker than you would normally do,? he said.
