PNB fraud: SBI has no direct exposure to Nirav Modi, says chairman Rajnish Kumar

KOCHI: The State Bank of India does not have any direct exposure to the billionaire diamond trader Nirav Modi, who is involved in over Rs 11,000 crore letter of undertaking scam, stated its chairman Rajnish Kumar here.

Though the bank has an indirect link through Punjab National Bank, Kumar preferred to play it down and said it is a small one. "Our exposure to gem and jewellery segment is less than 1 % of our total domestic loan portfolio amounting to Rs 16 lakh crore and is quite manageable," he told media persons.

He later said the exposure to PNB was to the tune of $200 million.

SBI chairman was in Kochi to inaugurate the bank’s global NRI centre, which will be a one-stop customer service centre for all NRI related services of the bank.

Terming the LoU scam incident as 'unfortunate', he said, SBI is in the process of further strengthening its credit risk advisory system which it had beefed up two years ago. `` The credit risk advisory system will play a much bigger role though the loan decision will be a collective one,’’ he said.

Describing the banking transactions as risky business he said SBI has elaborate system of risk management including internal and external audits and surprise checks. ``The effort is a continuous one and we keep plugging any gaps in the processes.’’. But he added that despite checks a breach of trust can happen.

The SBI chairman admitted that in the last two years there had been problems revolving around projects for corporate loans, which he referred to as `unsual’. He said the percentage of NPAs has gone beyond the tolerance limit for any credit risk process, which he believed was a transitory phase.

Though the NPAs in the retail loan sector, particularly in agriculture, has gone up too, the bank has been focusing more on retail loans. Dispelling the notion that banks have been granting more loans to corporates, Kumar said 60% of SBI loans are in the retail sector.

The global NRI centre will centralise operations of the bank currently spread across 16 circles, 92 NRI branches in 66 different locations and several NRI intensive branches. NRI accounts amounted to 8% of its total deposits with Kerala, Gujarat, Punjab and Delhi having a prominent share.