Partly Cloudy
24°CThu :Sunny. High: 29 Low: 14

SBI chief says new provisioning norms will have minimal impact

SBI chief says new provisioning norms will have minimal impact

Mumbai: The nation’s largest lender State Bank of India on Wednesday said it will have less than 1 percent impact on its pre-tax balance sheet or around Rs 200 crore annually due to the revised norms on NPAs and restructuring by the RBI.

“Total impact will be around Rs 200 crore a year which will be less than 1 per cent on a PBT (profit before tax) basis,” Chairman Pratip Chaudhuri told reporters on the sidelines of an international banking summit organised by the industry lobby IMC here.

On May 19, the central bank revised the norms on restructuring and NPA accounts, increasing the provisioning percentage on restructured accounts besides making loan recasts tougher by increasing promoters contribution.

Under the new rules, from June 1, banks must set aside provisioning for 5 percent of the value of a loan that is newly restructured, from 2 percent previously.

But the regulator said it will not force banks to re-classify loans as NPAs in the event of project delays in the infrastructure and commercial real estate sectors.

To discourage loan recasts, which has more than doubled last fiscal, RBI had said from April 2015 an account will have to be classified as sub-standard as soon as it is restructured and a standard asset on restructuring would be immediately classified as sub-standard as also non-performing assets.

“All restructured accounts which have been classified as NPAs upon restructuring, would be eligible for upgrade to the standard category after observation of ‘satisfactory performance’ during the ‘specified period’,” the RBI had said.

According to Icra, banks may have to keep an additional Rs 1,500-2,500 crore as provisions this fiscal for their existing recast loan book.

On the possible impact of reducing deposit rates on retail rates, Chaudhuri said it would depend on what competitors are offering on other instruments.

He also said despite reducing rates on bulk deposits in the recent past, such a possibility on retail rates seems to be remote.

Referring to credit growth in first two months of the current fiscal, Chaudhuri said, “the first half is generally slow. So, it will be unrealistic if we expect higher growth.

We are taking deposits because we think growth will happen in the second half. Growth today is coming from the consumer side.”

On Kingfisher Airlines, Chaudhuri said it will not be possible on his part to comment on a specific account.

He also said its worrisome to see stagnancy in the industrial sector.

 

Top Stories

wwq

Bigg Boss going to be much more hotter than before : Expected Contestants List

August-28-2014
All Bigg Boss 8 fans are excitedly sitting tight for the Bigg Boss 8 Contestants? How about we go to swing in
Inside Gold Bars Refining Plant As Gold Declines

Gold, silver bounce back on global cues, regular interest

August-28-2014
Gold costs recuperated by Rs. 55 to close at Rs. 28,230 for every ten gram in the national capital on Thursday, generally
0

Sonia Gandhi’s special Birth Day present to be in Court? Issued Summons to Appear on Dec. 9 in National Herald Case

August-28-2014
In an uncommon incident, a Delhi court on Thursday issued summons to Congress President Sonia Gandhi to show up in the court
MODI-BIG-AUG-28

Narendra Modi introduced Pradhan Mantri Jan Dhan Yojana

August-28-2014
The plan, about which Modi made the report in his Independence Day discourse, was propelled the nation over at the same time
0204-iwatch-1

Apple’s Iwatch anticipated that will be uncovered close by iphone 6 on September 9

August-28-2014
New Delhi: Apple is relied upon to disclose the greatly anticipated iwatch close by the iphone 6 dispatch on September 9. As
virus-ebola

Ebola’s re-development, a wake-up call

August-28-2014
Researchers, specialists and the pharmaceutical business ought to treat Ebola as a typical foe that must be vanquished with advanced solution and