SBI aims to tackle bad loans and Improve asset quality    
Industry News

With bad loans increased by Rs 5,791 crore in FY11, State Bank of India has appointed a deputy managing director to focus exclusively on non-performing assets (NPAs).

"The bank would have to be very careful about the restructured assets, which carry higher risks. We are aware of the need to improve our asset quality and would keep our eyes fixed on the net NPA (non-performing asset) number," chairman Pratip Chaudhuri said.

The NPAs of India's largest bank stood at Rs 25,326 crore as of March-end 2011, against Rs 19,535 crore as of March-end 2010

Chaudhuri said the bank had taken steps to improve the recovery of loans. "Most of the restructured assets are covered by security and these accounts have been with us for several years. The underlying securities in these assets are strong. There is no deterioration in the asset quality," he said. "But as the units have been hit by an economic slowdown, we need to be careful, since this has a multiplier effect. The bank has a specific person at the deputy managing director level to focus on NPA management," he said.

An integrated approach to review and manage assets, both standard as well as NPAs, including rehabilitation/restructuring, has been put in place to arrest slippages and for up-gradation of NPAs, Mr Chaudhuri said.

“Rural recovery teams have been activated to improve the health of the agriculture portfolio,” said the chairman.

State Bank of India (SBI) has set up 14 account tracking centres in all regional headquarters to curb NPAs due to high provisioning and non-performing assets in the fourth quarter.

All chief general managers (CGMs) of respective centres will coordinate to track the NPA scenario on a day-to-day basis.

From these centres, a phone call would be made to borrowers to remind them of their outstanding loans and the advantages of repaying the loans on time.

Government had given public sector banks six months till September to classify NPAs using technology under the core banking solution system, just after taking over as the head of the bank, SBI chairman Pratip Chaudhuri took action in the fourth quarter to track all NPA-related accounts. “By using such technology, the discretionary powers from the branch manager to classify defaulting accounts as an NPA would go away, as the software would flag any such case,” said an official of the bank.

"These centres are located in all the 14 regional SBI headquarters in the country", SBI managing director and group executive A Krishna Kumar said.

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