The country’s largest lender SBI, which has witnessed huge erosion in its net profit, has set up 14 account tracking centres to check non-performing assets, Parliament was informed on Tuesday.
“State Bank of India (SBI) has informed that they have set up account tracking centres in all 14 circles of the Bank to check non-performing assets (NPAs),” Minister of State for Finance Namo Narain Meena said in a reply in Rajya Sabha.
Mr. Meena also confirmed that the SBI has informed that the Institute of Chartered Accountants of India (ICAI) had sought reasons for higher provisions of NPAs for the fourth quarter of 2010-11.
SBI’s Q4 profits plunged by nearly 99 per cent to Rs 20.88 crore for the quarter ended March 31, 2011 versus Rs 1,866.60 crore it had posted for the same period last year.
One of the major denting factors was a 82 per cent jump in its total provisioning which increased to Rs 6,059-crore.
To another query on the reason for SBI earmarking higher provision for bad loans, Mr. Meena said, “Fresh slippages to bad loans during the 4th quarter of the financial year 2010-11 were to the tune of Rs 5,645 crore for which higher prudential provisions were made as per Reserve Bank of India guidelines.”
Another reason given by the bank was that during the nine-month period ended December 31, 2010, the Bank had made higher provisions for NPAs over and above the prescribed Income Recognition Asset Classification (IRAC) norms to achieve the 70 per cent provision coverage ration as per RBI guidelines.
“During the quarter ended March 31, 2011, pursuant to the revised guidelines issued by RBI on April 21, 2011, the Bank had created countercyclical provisioning buffer of Rs 2,330 crore till March 31, 2011,” he said.
Mr. Meena added that the provisions made by SBI for NPAs during the last three years — 2009, 2010, 2011 — were Rs 2,474.97 crore, Rs 5147.85 crore and Rs 8792.09 crore, respectively.
Responding to another query, Mr. Meena said that as on March 31, 2011, the gross NPA of public sector banks stood at Rs 71,047 crore, which also include NPA of loans availed by industrial houses.
He added that RBI and banks have already taken various steps to improve the health of the financial sector, reduce NPAs, and to improve asset quality, like prescribing prudential norms for provisioning and classification of NPAs, guidelines for prevention of slippages, debt restructuring schemes, etc.
