SBI will cap FY20 slippages to 2% of loan book, says State Bank of India chairman

If any high-value account slips during that quarter — like in the June quarter there was `16,000 crore which was due to agriculture — then that quarter will not look good.

State Bank of India (SBI) expects to restrict slippages for FY20 to 2% of the loan book, chairman Rajnish Kumar told reporters after the bank’s Q2 results. The bank will stick to its full-year credit growth guidance of 12-14%, he added.

Edited excerpts:

What do you expect slippages to be like for the rest of the year?

There is a baseline scenario for the bank and then there are exceptions. If you look at the baseline scenario, the gross slippages in NPAs (non-performing assets) are in the range of Rs 32,000-33,000 crore, which is normal. It includes accounts which keep on slipping and there are two accounts, one of which is phased restructuring and one is a stressed NBFC (non-banking financial company), which has so far not turned NPA in this financial year, but it is likely to come in this quarter.

So, overall, if baseline is Rs 32,000 crore or Rs 34,000 crore for the bank, which is 1.6% of our current loan book, and then there are slippages of different kind for which we should have provision. I’m not talking quarter-on-quarter; June and September quarters are good, but December and March, there may be some number. But ultimately, we have reached a situation where our gross slippages, in not so good circumstances, are not likely to exceed 2%.

What is your assessment of the telecom sector, in the light of the adjusted gross revenue ruling on Thursday?

Market has a tendency of showing exuberance for no reason and overly worrying with no reason. Whatever is the macro scenario is not in our control.
If we do a deep-dive analysis, there would be structured obligation and the government has allowed restructuring. If anything happens then the not-so-good scenario of 2% will play out. This is our normal level of slippage of Rs 8,000 crore per quarter. If any high-value account slips during that quarter — like in the June quarter there was `16,000 crore which was due to agriculture — then that quarter will not look good.

What is your forecast for recoveries?

By November 15, we are hopeful the judgment will come for one account. There are three-four large cases and we are hoping there will be a resolution. Leaving aside exceptional recovery, our PPOP (pre-provisioning operating profit) will be Rs 17,000 crore and we are close to achieving that by March 2020.
What is your approach with respect to a stressed mortgage lender. You have approached the finance ministry and do you see a resolution not happening there?
I never discuss individual accounts and as far as SBI is concerned, we have the capability to deal with the account and we will.