SBI chairman Arundhati Bhattacharya says increasing the amount of home loans for PSL is a positive step. According to her, overall asset quality pressure may ease in near-term.
The Reserve Bank of India (RBI) on Thursday revised priority sector lending (PSL) norms, adding new segments such as micro, small and medium enterprise (MSME ), social infrastructure and renewable energy under the ambit of priority sectors, which will come into effect with immediate effect
SBI chairman Arundhati Bhattacharya says the new PSL norms will help banks achieve target in a better way.
She further says that increasing the amount of home loans for PSL is a positive step.
According to her, overall asset quality pressure may ease in near-term.
Below is the verbatim transcript of Arundhati Bhattacharya's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Latha: Your comment on the entire priority sector rules, does life get easier, will banks be better able to achieve the targets?
A: Definitely banks will be better able to achieve the target mainly because a few things have been tweaked. The distinction between direct and the indirect has been taken away.
A number of new things have been added such as renewables, social infrastructure, food processing, so, that again gives us a lot more capability to do these things. The amount that you can take for housing loans also has been increased. It has gone up to Rs 35 lakh and Rs 25 lakh for the project cost. So, that again brings quite a large chunk of our lending into priority sector norms.
So, overall I think a number of positives are there and we are very happy that these things have happened because we believe we haven’t done the numbers as yet, it will take a little time for us to run it and see where we are coming but we believe we will be able to better achieve targets now.
Latha: There is in a sense that direct lending – eight percent for small and marginal farmers, would that be a challenge for banks for fewer branches? Banks like say a Development Credit Bank (DCB) or a Federal Bank or a YES Bank they get two years.
A: It will be a challenge for them. However, for banks like us that is not a challenge at all. In fact our lending is much more than eight percent whatever they have talked about. Much of our lending is to small and marginal farmers. However, probably banks like YES Bank etc may have difficulty. However, again this is a way in which may be if we can talk about the inter bank participation certificates and stuff like that. So banks that are achieving more they can exchange with those that do not have it so that kind of a thing can happen.
Latha: Yesterday your subsidiary, State Bank of Mysore reported a fairly deep fall, a perceptible fall in bad loans. Do you think we are nearing the end of this bad loan problem, will things get a little better for the industry itself?
A: If you remember, I have been telling you that we are seeing much less stress. So, that position continues. The only proviso I want to make is that there are few big ones so those might stilt numbers. However, overall, we are seeing stress less. State Bank of Mysore in fact has done very good given a very good set of numbers. You have seen the DCR has gone up to 69 percent. So, overall they have performed extremely well.