Money & Banking
SBI not rushing towards bankruptcy code due to lack of ecosystem
The State Bank of India has not been "rushing towards" the new Insolvency and Bankruptcy Code (IBC) to resolve cases of defaults as the entire ecosystem required for the new law has not so far been fully created, its chairperson Arundhati Bhattachrya said on Tuesday.
 
"The banking sector has in one voice asked for the Bankruptcy Code. As the country matures and evolves, it is necessary to have a judicial framework for orderly resolutions of assets. We cannot have makeshift structures that we were having earlier. So, we have been asking for a bankruptcy law and that has come.
 
"Now, the reason why we have not been rushing towards this is because with the law also you need to set up the ecosystem," she said.
 
Bhattacharya noted that first of all, the bench of National Company Law Tribunal (NCLT) has to be created, people have to be deputed on the bench and next, one needs to create an information utility, which has not come yet.
 
She also cited the requirement of certified and registered resolution professionals to go with the resolution process. 
 
"So, it has taken a little time for the law to be passed, rules to be notified and all the infrastructure to be created. Now, the ecosystem has begun getting created...it has been created, but not fully. And that is why we have seen that slowly the cases have been going on," she said. 
 
The SBI chief said all the 12 stressed accounts, which were identified by the Reserve Bank of India, were receiving its attention and it hoped to see fast resolution for the settlement of dues through the IBC.
 
"All of the stressed accounts are receiving our attention. As and when it will come up in front of the NCLT, we will be making our representations. And we hope that these resolutions will happen as fast as it currently laid out in the law," she said.
 
Last month, the apex bank had identified 12 large accounts with exposure of more than Rs 5,000 crore and more than 60 per cent of which is recognised as NPAs. Banks have to refer to the IBC for these accounts.
 
Bhattacharya said the amount of provisioning that needs to be made on the 12 stressed accounts would "slightly" be above of what the bank would have made in any case.
 
"It will obviously hit the bottomline (of SBI), but not to that extent," she said.
 
She was in the city for the inauguration of bank's wealth management services and Bhattacharya said the bank is among the first PSU lender to introduce such services. It is targeting to have SBI Exclusif outlets in 13 centres in the country in the current financial year.
 
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

 

User

Credit growth in the banking system is low: SBI chief
India's largest lender, State Bank of India's Chairperson Arundhati Bhattacharya on Tuesday said the credit growth in India's banking system is low.
 
Elaborating on the current economic growth rate and inflation rate, Bhattacharya said: "Credit growth especially in the banking system is low. Nine is the percentage at which the credit should grow. The credit is, however, growing at close to five (per cent).
 
Today, much of the credit at least for the companies that are doing well comes from the market...if that number is added, the credit growth comes around 7.5 per cent. Even it (the credit growth) is lower than a number it should be." 
 
According to her, the lender will bring a number of retail products in the digital space and data analytics will play a key role in digital banking.
 
"We will bring a number of retail products in digital space and in the corporate front, we will also provide... we have lot of plans. Some of them we will begin delivering within in a very short period of time. They are currently undergoing core user group testing. They will be out very shortly," she said.
 
"On the corporate side, we will be using not only platforms to bring people together, but also analytics to find out who is producing and who is needing what," Bhattacharya said while emphasising on how the lender is going to leverage the digital platform.
 
Addressing participants at Banking Conclave organised by Ficci, she said the lender will use data analytics in retail banking too.
 
On the SBI's credit-deposit ratio at around 50.5 per cent in West Bengal, she said: "We need to create right situations for credit absorption. If there is no credit absorption capacity, pouring lot of credit will cause NPAs."
 
After inaugurating the bank's wealth management services in the city, Bhattacharya, later in the day, said credit absorption capacity in the north and eastern states are relatively low. 
 
She said that what needs to be done in West Bengal is to have a look at value chain financing.
 
She, however, said consumption led retail credit growth has been progressing and on the other hand, investment demand has not so far been picked up. 
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

User

NPAs Are Ultimately Taxpayers’ Problem, Not Bankers’
Non-performing assets (NPAs) is a funny term. The adjective ‘non-performing’ is now part of daily conversation. However, the impact of NPAs is far-reaching and will have damaging consequences on the economy. NPAs are not a banker’s problem or the government’s problem. It is the taxpayers’ problem. Where the government uses public sector banks (PSBs) as a convenient tool to win...
Premium Content
Monthly Digital Access

Subscribe

Already A Subscriber?
Login
Yearly Digital+Print Access

Subscribe

Moneylife Magazine Subscriber or MAS member?
Login

Yearly Subscriber Login

Enter the mail id that you want to use & click on Go. We will send you a link to your email for verficiation

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Online Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Online Magazine)