State Bank of India (SBI) may see some gross non-performing assets (NPAs) arising out of the corporate portfolio in the second half of financial year 2019-20, a senior executive from the bank told television channel CNBCTV18 on Monday.
“We do expect some kind of headwinds from certain corporates which are probably being talked about, but I think overall since we have started providing for those NPAs, though the gross number might look different. Nevertheless, while we have started providing for those NPAs so I don’t expect that it will have a significant impact,” SBI MD for global banking and subsidiaries, Dinesh Khara said.
Khara added that the gross bad asset value is a function of the state of the economy and the stress on balance sheets.
SBI has, for quite some time, been following a policy of upfronting provisions in order to minimise shocks from credit events, Khara said.
The Reserve Bank of India said in the December 2019 edition of its Financial Stability Report that stress tests indicate that under the baseline scenario, the gross NPA ratios of all banks may increase to 9.9 per cent by September 2020 from 9.3 per cent in September 2019. —FE
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