The country's largest bank, the State Bank of India (SBI), has segregated the direct COVID-19-hit stress in its loan portfolio at Rs 93,483 crore.
The Mumbai-headquartered state-owned bank, quite transparently, listed out sectors where coronavirus crisis has directly impacted businesses. These include aviation, commercial real estate, tourism, hotel and resorts, private sector NBFCs and the power sector.
The biggest head is the NBFCs with more than 30 per cent share at Rs 29,530 crore. These are private sector NBFCs. The bank's total exposure to NBFCs and financial institutions is quite large at Rs 1.78 lakh crore, but the bulk of loans has been extended to Central and state government-backed NBFCs and NBFCs backed by large private sector institutions such as Bajaj Finance or HDFC.
The next largest head is the power sector with Rs 27,554 crore. Over the last five years, the power portfolio has given a lot of pain to banks, especially public sector banks as there was excess capacity, coal license cancellation and high leveraging. But things are not stabilising for the sector. The SBI says there are some vulnerable independent power producers (IPPs) with credit rating below A - (minus). Anything below B rating is considered junk, that is, below investment grade. These IPPs with A- (minus) rating are most vulnerable to post-COVID economic downturn.
The Rs 26,665-crore exposure to commercial real estate, says SBI, is directly hit by the COVID-19 disruptions. This, however, excludes lease rental discounting. The exposure to tourism, hotel and resort is not much at Rs 9,268 crore. Similarly, the bank's aviation sector exposure is small at Rs 466 crore.
The bank doesn't see an adverse situation arising out of COVID-19-hit vulnerable sectors as these are about 5 per cent of the domestic advances and a little less than 10 per cent of the corporate advances. However, experts suggest the COVID-19-related direct stress is just one part of the bigger stress issue across the board. The retail exposure, which has had a solid track record of negligible NPAs, is also vulnerable due to steep decline in the growth and loss of income and job losses in the organised sector. Similarly, the corporate sector is staring at more stress as not a single sector can be called safe today.
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