State Bank of India (SBI), the country’s largest lender, said on Saturday it has seen a little easing of stress on power sector loans on the back of fuel linkages, but is not looking for any fresh exposure to this sector immediately.
SBI chairman and managing director Arundhati Bhattacharya, speaking on the sidelines of an event to mark International Women’s Day in Kolkata, also said non-performing assets (NPAs) management and customer delivery were focus areas for the bank.
She said the SBI was planning to sell a portion of its NPAs to asset reconstruction companies (ARCs) during the fourth quarter this fiscal. Declining to divulge any target figures to offload bad loans, she said, “I cannot tell you the numbers, but depending upon the offers we get, we will certainly sell NPAs
On further credit to the infrastructure sector, she said, “The infrastructure sector continues to be under stress. But we have been seeing some turnaround, especially in the power sector. But immediately, I am not seeing any further credit for it. New projects have to come for this to happen.”
Fuel linkage had been a big concern for the country’s power sector and to ease this the central government has asked Coal India (CIL) to sign fuel supply agreements (FSAs) with power plants. Accordingly, the state-run coal major signed more than 150 FSAs for a capacity of 71,145 MW till December last year.
Significantly, SBI’s asset quality remains under pressure due to higher exposure to stressed sectors such as infrastructure, including power, iron and steel and textiles, which account for most slippages in the corporate segment. The bank’s exposure towards infrastructure sector at the end of third quarter this fiscal stood at above R1,34,000 crore, which was about 13% of its total domestic advancement.
The public sector lender’s gross NPAs stood at R67,799.33 crore at the end of December last year, up from R53,457 crore in the year-ago period.
As of December 31, 2013, the bank's portfolio quality declined, with gross NPAs at 5.73% of gross advances, as against 5.30% a year ago.