Mumbai: Lending major SBI on Tuesday said it may have to make a little more provisioning towards large NPA (non-performing asset) accounts referred by the RBI for resolution and that this should not “badly impact” earnings.
According to State bank of India (SBI) Chairman Arundhati Bhattacharya, “pretty large provisions” have already been made for these accounts.
Bhattacharya said this after the bank’s annual general meeting (AGM) that concluded here on Tuesday. She was responding to a question about a possible increase in provisioning for the 12 large NPA accounts.
Recently, the Reserve Bank of India (RBI) referred 12 large NPAs in the banking system for resolution under the Insolvency and Bankruptcy Code, 2016 (IBC).
On Monday, credit ratings agency Crisil said that the lenders might need to raise provisioning to deal with large stressed assets.
“Based on Crisil’s assessment of embedded value in the top 50 NPA (non-performing asset) cases, we estimate a 60 per cent haircut would be needed on these loan assets,” said Krishnan Sitaraman, Senior Director, Crisil Ratings.
“That would mean that banks will have to increase provisioning by another 25 per cent this fiscal, compared with nine per cent in the last.”
As per Crisil’s study, banks have already provisioned 40 per cent for these 12 large NPAs worth Rs 2 lakh crore before the RBI move.