“In terms of asset quality, I did not say 2016-17 will be a lot better. In fact, I said there could be pains as well because the numbers we have taken are basically on the fund- based part but the non-fund based part also gets converted subsequent to classification,” SBI Chairman Bhattacharya told reporters after the annual general meeting of the bank here.
The public lender’s gross NPA went up to 6.50 per cent in 2015-16 from 4.25 per cent the previous year, and net NPA rose to 3.81 per cent from 2.12 per cent.
Bhattacharya said the NPA numbers may have gone up but going forward, the quality of assets will be better.
“You can’t see this right now as there is always a lag effect, there is a legacy effect. But as the legacy effect wears off, we will definitely see asset quality become much better,” she said.
She said good monsoons and implementation of 7th Pay Commission recommendations are expected to ramp up credit demand.
“We need demand to come back. We are already witnessing demand in segments like commercial vehicles and power generation, and if it becomes a little broad-based, then it will definitely be good,” she said.
On the pay panel, which has recommended a hike of 23.5 per cent in salaries of central government employees, she said it will lead to better deposit growth as people will have more money in their hands, but ruled out raising deposit rates.
“I don’t see an increase in deposit rates at this point in time. If you look at inflation, depositors are getting a very real rate of interest now. So to that extent I do not see deposit rates going up,” she said.
Bhattacharya said she is hopeful of achieving a credit growth of 12-13 per cent this fiscal on the back of impetus the government is giving for various projects.
Asked about which of SBI’s five associate banks will be merged with it first, she said, “We are going to merge all of them, not on the same day, but as quickly as possible.”
On the Reserve Bank‘s scheme for sustainable structuring of stressed assets (S4A), she said it is not clear how many companies will qualify for this.
“As of we are looking at all of the companies plus we need their balance sheets, many of them have not given us their audited balance sheets. So only after we get all of those we will be able to find out,” she said.
On the stressed assets funds, Bhattacharya said SBI is talking to several players. “Many foreign funds are likely to invest in the proposed fund,” she added.