Like State Bank of India: Gautam Sinha Roy

Gautam Sinha Roy - Fund Manager at Motilal Oswal Mutual Fund told CNBC-TV18, "The non-performing assets (NPA) issues are still not over for PSU banks. Probably the worst is over but it in terms of new stress asset formation we will still see a lot more of it. So, from a return on assets perspective these banks will still be at very low levels less than one percent, substantially low than one percent in most cases for the forcible future. A turnaround would be led by two things, one would be the investment side recovering and interest rates also coming down and both of them ideally should be happening in tandem. It is a whole host of things which have to be taken care of both on the fiscal side, on the monetary policy side individual company’s balance sheet repairing themselves for a period of time.""Our best guess is that it will take good time a few quarters more at least for the economic conditions to be good enough for PSU banks to start getting into the recovery mode in terms of earnings. Within that pack of course we continue to like State Bank of India (SBI) because we believe that it is ahead of the curve in terms of the NPA cycle. A lot of company specific things which has happening, a very positive there," he said. "I believe earnings growth could be robust in State Bank of India and probably a few more of these banks which you are not invested in. As a pack, things are still not looking rosy, inspite of the capital infusion program and all that which was needed anyways for the good health of these banks. However, not a space that we are very positive on as of now."