India's largest bank, State Bank of India (SBI), is hoping for a conversation between the government and telecom sector over the Supreme Court's (SC) order of Rs 92,000 crore Adjusted Gross Revenue (AGR) to paid within the next three months.
Kumar, in an exclusive interview to CNBC-TV18 post the bank's second quarter ended September 30, 2019 results, said, "There will have to be a way out because it’s an important sector from India’s economy perspective. We are keeping the sector under watch but there is no immediate threat."
The government and the telecom companies were locked in a legal battle in a 14-year-old case over the definition of AGR, on the basis of which the telecom department calculates levies payable by companies. With its judgement, the apex court has exposed the incumbent telecom firms to potential demands by the Department of Telecommunications (DoT) of Rs 92,000 crore.
The court has held that all revenues, except for termination fee and roaming charges, will be a part of the AGR. Telcos had argued that non-telecom, non-core revenues should not be a part of the AGR.
The amount of Rs 92,000 crore claimed by DoT as licence fee includes the principal amount, interest and penalties. Of the Rs 92,000 crore, Rs 21,682 crore is sought from Bharti Airtel.
Bharti Airtel said the company is deferring making its second quarter results public due Tuesday until November 14 as the company seeks more clarity on the Supreme Court’s verdict on the adjusted gross revenues (AGR).
He further said that no telecom company has approached the bank for restructuring their loans.
Talking on SBI's quarterly results, Kumar said the net interest margin is sustainable and we do see limited chances of decline hereon.
“It is difficult for the bank to operate on net interest margin lower than these margins. Around 3.20 is what we are looking at on consistent basis,” he added.
On external benchmark, he said, “It takes time for any reprising to happen even external benchmark related pricing will happen, will have some impact and when we meet for our asset liability management committee every month, we will review it.”
On loan growth, Kumar said, “We have sufficient pipeline where disbursements are pending or have not been availed and there are a couple of large ticket loans plus working capital loans where sanction limits are available. So as of now the utilization was, in the large corporate book, only about 31-32 percent. Second half being the business season the utilization will improve and that’s where the push from the corporate side will come.”
“We are not lowering our home loan target because in many cities we are finding that the demand is fairly okay,” Kumar added.
On stressed account front, he said, “As of now there is one account and it is a chunky account and when this loan was sanctioned it was AAA account.”
Speaking about Essar, he said, “Our recovery as per the resolution plan was Rs 11,000 crore which is fully provided for. If we have to share something out of it then I do not know how much will it be, but it may not have very huge impact because it’s a written off account."