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finance | IST

SBI expects to beat street estimates on credit cost for FY22

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Our effort and endeavour is to keep the credit cost as minimum as possible and we have generally beaten the street estimate on the credit cost. Our effort would be to maintain the trend, said Dinesh Kumar Khara, Chairman of SBI.

With regard to the banking sector, there are many things to discuss like the NARCL or the bad bank, account aggregators, fintech challenges, and a whole lot of old legacy assets that are probably getting resolved. To discuss all this in-depth, CNCB-TV18 spoke with Dinesh Kumar Khara, Chairman of SBI.
On credit cost, Khara said, “Our effort and endeavour is to keep the credit cost as minimum as possible and we have generally beaten the street estimate on the credit cost. Our effort would be to maintain the trend.”
On SBI’s exposure to Vodafone Idea, Khara said, “About Rs 2,00,000 crores were the overall dues to the company, Rs 1,50,000 crore were the dues towards AGR, spectrum etc. Rs 50,000 crore was from the banking system. As far as Vodafone is concerned, we will have to rework the situation because the new scheme which has been announced by the government, it will certainly give relief to entities like Vodafone and their requirement for bank guarantees and non-fund-based facility will come down significantly. We are all meeting at the bank level and trying to ascertain the likely impact. But overall, I would say that it is quite a positive impact for entities like Vodafone. Hopefully, they will be patient to invest into technology, which will eventually upgrade their 2G customers; they have got a huge base of 2G customers. Once they invest into technology, their ARPUs, in general, will also lookup.”
When asked If SBI would be open to lending if Vodafone brings in fresh equity, Khara said, “Obviously, because if they bring in more equity, if at all they sense in terms of long-term plans with ARPUs to improve, we will have to evaluate afresh and we will see how best the telecom sector can be helped.”
On NPAs of the entire PSU banking system in the backdrop of the bad bank, he said, “Overall about Rs 2, 00,000 crore worth of stress assets are likely to move to NARCL and which will be up for resolution. So, as far as the State Bank of India is concerned, we have about Rs 22,000 crore worth of assets that have been identified and we will be doing it in two tranches. In the first tranche, it could be around Rs 16000 crore and in the second tranche, it would be about Rs 6000 crore.”
“This is a very positive move. Of course, first part of it is the aggregation and after the aggregation, the ability of the asset to fetch better value improves significantly. More importantly, in case of NCLT it did not allow sale of assets to the investor whereas, in the case of bad bank, that is possible. It will also avoid inter-lender litigations. So, the pace at which the resolution can happen will significantly go up,” he further added.
He also mentioned that SBI has already provided for 100 percent of the assets to be moved to NARCL.
For the full interview, watch the accompanying video