The State Bank of India (SBI) is expecting a recovery from the bankruptcy cases in the National Company Law Tribunal (NCLT) this financial year, said Rajnish Kumar, SBI chairman, after the bank posted a net loss which doubled on a year-on-year basis.
Kumar said Rs 78,000 crore of losses are in the first two lists of the NCLT and hence expects the recovery this financial year itself.
The bank's net non-performing assets (NPA) stood at 5.73%, slightly higher than the 5.61% posted in the last quarter, while the gross NPA stood at 10.91%, higher than third the quarter's 10.35%.
Kumar said the new watchlist for the bank includes Special Mention Accounts (SMA) — type two and type one and a few accounts from type zero. The watch list consists of corporate accounts.
Special Mention Accounts are those assets or accounts that show symptoms of bad asset quality in the first 90 days itself.
On the bank's gross non-performing assets, Kumar said he is expecting a reduction by Rs 50,000 crore. The gross NPA for the bank in Q4 stood at Rs 2.2 lakh crore as against the Rs 1.99 lakh crore in Q3.
The bank stock surged in trade after posting its Q4 results as the investors seemed to be convinced that the bank is on a healthy recovery path from the recent bad loans mess in the banking sector.
Kumar said the recovery in written off accounts has increased by 35% and said the first list of the resolution cases in NCLT is expected to be resolved by the second quarter of the current financial year.
On the recent Bhushan steel resolution case development, Kumar said a recovery of interest and income of Rs 1500 crore from the case is expected.
On RBI's recent NPA circular, Kumar said, "Rs 50,000 crore of the stressed assets as of third quarter in the last financial year had many standard accounts
5/25, SDR, among others, but now all are history due to RBI’s circular."
On NCLT's second list, Kumar said that he expects the accounts to be resolved by the end of this financial year and he said that there is more clarity in the first list in terms of the accounts' resolution.
India's banking sector has been facing the NPAs problem at large. The Reserve Bank of India (RBI), last year, had released a list of large defaulters, where SBI was among those banks which had lent the maximum to such defaulters.
The debt-laden companies are still facing their insolvency procedures under the Insolvency and Bankruptcy Code (IBC).
"There are some signs of recovery amongst working capital cycle and few large ticket sized projects, " Kumar said on the bank's business, and said that the bank may require an additional Rs 20,000 crore of capital this fiscal.
On the bank's business plans, he said the bank is looking to divest stake in its subsidiaries and list SBI mutual funds, SBI cards and SBI General by next financial year.
He said that the bank is expecting some stake sale in SBI General, but there are no plans to list it this financial year.
Kumar said that the bank will look to dilute around 5% stake in its life insurance subsidiary at a good value.