SBI bad loans balloon, post-merger provisioning may rise

NEW DELHI: State Bank of India's bad loans have ballooned approximately 50 per cent in the span of a year and those of its five associate banks by 170 per cent.

The bank will likely have to increase its provisioning for bad loans -- setting aside money to partly cover the non-performing assets (NPAs) following its merger with five subsidiaries.

SBI, which had a provisioning coverage ratio of about 59 per cent, said that after the merger it will revisit the NPAs and provide accordingly.

"Depending on the age of NPAs, we provide provisioning as per the norms. Hundred per cent provisioning is not a practice in the industry," SBI Managing Director Dinesh Kumar Khara told IANS.

SBI's gross NPAs in December 2016 were at Rs 1.08 lakh crore, an increase by 48.6 per cent from Rs 72,792 crore in the third quarter FY16. The bank's net NPAs rose by 52.6 per cent during the same period.

SBI's five associate banks reported a 172.8 per cent increase in gross NPAs at Rs 55,164 crore in December 2016, as compared to Rs 20,218 in the same period in 2015-16. The net NPAs of these rose by 218.7 per cent in the same period.

The five associate banks with which SBI merged on April 1 were: SBBJ (State Bank of Bikaner and Jaipur), SBM (State Bank of Mysore), SBT (State Bank of Travancore), SBP (State Bank of Patiala), and SBH (State Bank of Hyderabad).

The Bharatiya Mahila Bank, which is not an SBI subsidiary, was also merged with it on the same day.

The combined gross NPAs of SBI and its five associate banks as on December 31, 2016, stood at Rs 1.6 lakh crore or 8.70 per cent of the total assets, while the net NPAs were at 5.33 per cent.

"As far as the corporate books of associate banks are concerned, we started converging the NPA books of corporates from September quarter; so I don't envisage any surprises on that," Khara said.

State Bank of India