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Increase in NPA due to stress in steel & textile sector - SBI
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Wednesday, 20 Feb 2013

Business Standard reported that State Bank of India said that increase in its non performing assets was because it lend to the sector which is in a way is the real economy that is still in a significant stress. The sector mainly iron and steel and textile.

Mr Pratip Chaudhuri chairman of State Bank of India said that there has been a shortage of iron ore because India is quite efficient in steel making and Indian iron ore were being exported but due to ban on mining of iron ore companies operating in this sector could not get raw material but as the bans are getting Lifted things should look better.

Mr Chaudhuri said that more importantly there has been default by State Governments particularly the State of Andhra Pradesh should come in for a special mention. They are running behind in compensating many contractors who have built roads, canals.

The SBI Chairman also said that generally the Q4 is the best quarter because this is the quarter in which State Governments realize lot of revenues and clear much of the outstanding areas.

He said that “We hope that this trend continues. In infrastructure the largest segment is power followed by telecom. In power SBI's exposure is to well managed with state run companies like NTPC, Power Grid, Neyveli Lignite Corporation. So there is less stress and five state electricity boards Punjab, Rajasthan, Uttar Pradesh, Andhra Pradesh and Tamil Nadu are in difficult situation in terms of accumulated debt and losses.”

He added that SBI's exposure to textile sector is around INR 8,000 crore. On Basel III he said that it makes Banks stronger, Basel III requires banks to have Tier 1 capital of 6% of their assets and as on March 31st we have 10%.

He said that “On the outlook overall Banking outlook is good. This county has 30% of GDP is savings. Our deposit growth is 15% YoY and loan growth is 17% year on year. Outlook is very promising.”

Source - Business Standard


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