The first woman head of the country\\\'s largest lender SBI said that there is not much stress on large corporate assets and the small and medium enterprises (SMEs) sector is doing rather better than anybody anticipated.
The first woman head of the country's largest lender SBI said that there is not much stress on large corporate assets and the small and medium enterprises (SMEs) sector is doing rather better than anybody anticipated.
According to her, the situation is bad only in mid-corporate and large SME segments. "Other sectors are also doing well. Retail business is doing well, too. The demand in agriculture is quite good. Service-oriented SMEs like small law firms, beauty parlours, event managers, fashion firms, catering, IT-enabled services (ITeS) are doing really well," she said.
Bhattacharya pointed out that the main problem is in the mid-corporate segment, "They do not have deep pockets, cannot extend working capital cycles and are not getting equity. It is difficult for them to get investors as well. Another major problem for them is they do not have much non-core assets."
Mid-corporate and large SME segments account for more than 66% of SBI's stressed assets. Mid-corporates account for 18% of the bank's loan book. Bhattacharya said that the bank is considering sale of non-performing assets (NPAs) to asset-restructuring companies (ARCs) this quarter. "
This is the first time we would be selling NPAs to asset reconstruction companies (ARCs)," she said. SBI's gross NPA ratio in the October-December quarter rose to 5.73% from 5.30% a year ago, and 5.64% in the previous July-September quarter. The bank's net bad loans ratio increased to 3.24% from 2.59% a year ago.