Provisioning for large NPAs not to impact earnings: SBI
Large Tuesday MEP funding may need to pay a little more provision for large NPA accounts (delinquency) returned by the RBI for resolution and it should not have “serious repercussions” on the results.
According to President Arundhati Bhattacharya of the State Bank (OSE), “more important provisions” have been made for these accounts.
Bhattacharya said this after the bank’s annual general meeting (AGM), which ended here today.
She was responding to a question about a possible increase in funding for 12 large NPA accounts.
Recently, the Reserve Bank of India (RBI) has returned 12 major ANPs in the banking system for resolution in accordance with the Bankruptcy and Insolvency Code, 2016 (IBC).
On Monday, credit rating agency Crisil said lenders may require an increase in provisions to deal with large stressed assets.
“According to the assessment of the intrinsic value of Crisil in the first 50 cases of NPA (unproductive assets), it is estimated a 60% hair reduction is necessary in these assets,” said Krishnan Sitaraman, Senior Director, CRISIL Ratings.
“This would mean that banks will increase the 25 p. 100 budget provisioning, compared with 9 percent in the latter.”
The study by Crisil, banks have already provided 40 percent for the 12 major national action programs worth Rs 2 lakh million rupees before the RBI movement.