SBI Chairman Dinesh Kumar Khara on Monday (February 22) said that economic activity would continue even as COVID-19 cases rise. In conversation with CNBC-TV18, Khara he suggested that SBI will remain well within its guidance on slippages and credit cost.
Majority of borrowers with unsecured loans are salaried and government employees and hence the bank does not see any challenges in unsecured book, the SBI chairman said.
"When it comes to unsecured retail credit, the term 'unsecured' itself gives an impression that it is vulnerable. But much of it depends upon the underwriting and quality of the book. So, with our case, majority of borrowers who have been extended unsecured loans are salaried employees either from government, public sector, or well-rated corporates. To that extent, although it is unsecured, I would say that in terms of their behavior they are doing much better. We don't see any challenge here,” he explained.
The bank reviews its portfolio quality on a regular basis and use data analytics for effective control over the quality of book. "All measures have led to an improvement in the asset quality," Khara added.
Working capital utilisation will improve with improving capacity utilization, said Khara and highlighted, "Working capital is directly a derivative of the capacity utilization. The country’s capacity utilization was around 55% and so with the increasing demand I am hoping that capacity utilization will improve and that will lead to an improvement in the utilization of the working capital. That will be something which will help us in having a loan growth also."
He elaborated that the bank was not looking at divestment of subsidiaries in the current fiscal. However, he said that they will evaluate various options for capital raising in the next financial year and could look at divestment in the mutual fund business first.
On the digital front, he revealed, "Our digital transactions have gone up significantly in the current year. It has gone to the extent of 64 percent now. But our endeavor is that we should sweat all our digital assets to optimum and we should be in a position to reduce our operating cost or maybe to improve our cost to income as much as possible."
He also said that they are keeping a close watch on the stressed assets book and are making efforts via one time settlement (OTS) and other means for recovery as soon as possible.To know more, watch the video.