The past two quarters have not been easy on the State Bank of India. In February, it had reported its first quarterly loss in 17 years, if not more, and in Q4, its net loss had tripled to Rs 7,718 crore.
But the country's largest lender is a lot more optimistic about this fiscal year. According to The Economic Times, SBI is aiming to recover Rs 50,000 crore this year and is strengthening its recovery team for better collections.
Of this amount, SBI hopes to recover around Rs 30,000 crore just from the cases with the National Company Law Tribunal (NCLT). According to Pallav Mohapatra, Deputy Managing Director of Stressed Assets Resolution Group at SBI, the bank's total exposure to the two lists of stressed assets referred for resolution by the RBI last year stands at around Rs 78,000 crore. The report added that its provision coverage ratio on the first set of 12 NCLT accounts is reportedly 56 per cent, and 75 per cent for the second list. So far, the bank had filed 250 cases under IBC with a total exposure of Rs 95,000 crore.
In its analyst presentation for FY2018 results, SBI had said that its expected haircut on the first list of stressed assets is 52 per cent and it is optimistic that a bulk of the resolutions will go through in the first half of the current fiscal. But it's slow going, so far, on the NCLT front since most of the cases have been largely trapped in legal hurdles, although the recoveries have been decent. The bank was able to recover Rs 8,500 crore from the Bhushan Steel-Tata Steel deal, taking a haircut of 30 per cent. It expects to recover Rs 6,000 crore from the Electrosteel-Vedanta deal. The bank expects the second NCLT list to be resolved by the end of this fiscal and anticipates roughly 25 per cent recovery from it.
"The guidance has been given to our teams, now the entire system is geared towards making the recovery possible," Mohapatra told the daily. "We will be using a variety of tools ranging from taking some of these accounts to NCLT, selling bad loans to asset reconstruction companies, one-time settlement with promoters and specific camps for retail borrowers who haven't paid up on time."
SBI also told the daily that it will be much more aggressive in dealing with restructuring cases in the future. "If a fresh restructuring is done, banks have to look at what is the skin in the game for the promoters and if the current management is not capable of handling stress situations, then the bank will find a new management to run the company," said Mohapatra.
The bank expects to get back around Rs 10,000 crore from one-time settlement, sale to ARCs et al.
With PTI inputs