SBI board discusses NPA issue

A couple of days after the SBI Chairman hinted at a drastic reduction in bad loans, the board of the Government-run lender today discussed the issue of NPAs and the ways to reduce them further.

"At the SBI board meeting we sat down on particular cases and looked at them," Financial Services Secretary Rajiv Takru told reporters here. He said the board looked at stressed assets from both ends so as to make sure one with "malafide interests" does not get much leeway while those which can be restructured are not unnecessarily troubled by classifying them as NPAs.

"We are trying our best that no genuine case of restructuring is punished and we are also trying our best to see that no malafide cases of NPAs gets too much benefit because of generosity on our part," he said. Two days ago SBI Chairman Pratip Chaudhuri had said the bank has been able to bring down its gross NPA ratio to 4.50 per cent, or Rs 49,000 crore, at the end of fourth quarter from 5.3 per cent in the previous quarter. SBI is yet to announce its quarterly and annual results and Chaudhuri had said the numbers were provisional.

NPAs have been a major issue for the country's largest lender. Its NPA ratios are among the highest (at 5.3% in Q3,it was much higher than the average of 3% for its state-run peers) in banking system. SBI blames weak economic conditions and structural problems for the stress on its books.

Meanwhile, to a question on whether the Government will reduce its stake in the public sector banks (PSBs) to meet the stringent capital requirements for the new Basel-III model, Takru said such a thing is not on the agenda. "At the moment we are not looking at that (reducing govt stake) possibility at all," the IAS officer said.

Instead, the Finance Ministry, which has asked PSBs to reduce the net NPAs to 1 per cent level, is counting on a reduction in bad loans and the capital support set aside in the Budget to help the banks meet the norms, he said. About the steep fall in gold prices and if the Centre is considering any change in policies because of that, Takru said it is very early days for the Government to act upon and announce changes. "Its (crash) three days old. We don't have horrible knee-jerk reactions," he said.