Feb 26, 2016, 08.13 PM | Source: CNBC-TV18
In an interview with CNBC-TV18, B Sriram, MD of SBI said that SDR for SBI stands at Rs 16000 crore and some provisions are already taken undertaken for the same.
Read more: RBI revises SDR norms; asks banks to higher provisions of 15%
Reacting to these changed guidelines, B Sriram, MD of SBI said that the intent of RBI norms on restructuring of assets is to streamline the operations issue.
In an interview with CNBC-TV18, he said that SDR for SBI stands at Rs 16000 crore and some provisions are already taken undertaken for the same.
He further said that the bank is well capitalized at the moment and does not require any capital for this year.
Below is the verbatim transcript of B Sriram's interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.
Latha: First the negative news, you will have to provide 15 percent for restructured loans or refinanced loans. Is it only for strategic debt restructuring (SDR) loans and is that a bolt from the blue. Will that mean a lot more provision?
A: The basic intent of the guideline, if I may just comment, is threefold. One is to streamline the operating issues; operational issues that are there. Second, to ensure that there are adequate provisions over the period of SDR process so that they do not have to get into a cliff effect of provisioning at the end of the period and thereby the banks will be in a better position to provide and be ready if there are any negative impacts not going through SDR process at full. Third, trying to protect the value of assets because it is highly likely that the assets will start to deteriorate if we do not get fast result and thereby the banks have been told to improve the decision making and try and make sure that in case you don\\'t do it then there is a negative incentive on that. So these three ideas are there and there are no negatives as far as I can see.
However, surely an effect of provisioning, which will add but this will be over a period of time in two parts; one, mark to market (MTM) provisions of the equity part which will hold after transfer and the other is 15 percent provision which will be returned back after a specified period of running of the unit after the promoter takes over the unit.
Sonia: Can you help us with some indicative numbers. What is the total quantum of SDR undertaken by banks, by the industry as a whole and by SBI particularly and if you have to provide 15 percent for refinanced loans, what would the ballpark provisions be?
A: On a broader sense, in SBI we have done around Rs 16,000 crore of SDR but there are some provisions which have already been taken in some of these accounts. So I do not have the exact numbers right now but these are all manageable numbers as far as SBI goes.
Sonia: And for the industry as a whole, would you give us an indication of what is the total quantum of a SDR that is undertaken by the banking industry?
A: I do not have the numbers at the moment
Latha: Will this make SDR less attractive hereafter?
A: Surely not. SDR is an instrument to make sure that--if you see Para one of Reserve Bank of India's circular, there is intent in going through the SDR route. It\\'s not each and every company has NPA issue will be eligible for SDR. Its only where we feel that in cases where change in the ownership is likely to improve the value of the asset and the prospects of the recovery of the loan keeping the asset value intact, is going to be positive for a company and that is when the Joint Lenders Forum (JLF) is suppose to be doing the SDR. So it\\'s not that every company will go through SDR route.
Latha: There was a statement that came from the RBI this morning that the Ujwal DISCOM Assurance. Yojana (UDAY) bonds will not have to be mark to market and they will be privately placed. Does that mean big relief for the bond markets now that load will not come?
A: I think it will stabilise a lot of issues in respect to UDAY bonds. However, earlier also the intent was in terms of conversion from debt to bond and most of the conversions for the banks, who were holding the debt that they will subscribe to the bonds. So whatever little confusion was there is clarified by the RBI guidelines.
Sonia: Since we have the Union Budget upon us I wanted to ask you, our colleagues are picking up that perhaps the bank recapitalisation figure could be to the tune of Rs 30,000 crore-35,000 crore announce in the Budget this time. What would you reaction be to that figure and would that be sufficient for the industry?
A: We will have to wait for figures to come and then make a statement. However, I am sure that the government is behind all the banks in terms of providing adequate capital as and when required. As far as SBI is concerned, we are quite well capitalised even now in excess of 12.5 percent and at the moment we are not looking at any further capital for this year. Surely the government will provide adequately in the Budget and plus what has been stated by them over a period of time.
According to Ashwani Gujral of ashwanigujral.com,
SBI is likely to raise Rs 1,800 crore by selling a
LIC, the largest shareholder of the stock exchange
The merger of five associates and the Bharatiya Ma
In a report, the Economic Research Department of S