Mumbai: India’s largest lender, State Bank of India (SBI), has not stopped lending to non-banking financial companies (NBFCs) and continues to give them loans based on its risk perception of the borrower, said Arijit Basu, managing director, SBI.
“SBI is already lending to NBFCs and will continue to do so. Our decisions are taken based on risk perception that we have on a particular entity," said Basu, speaking on the sidelines of IMC’s Banking and Finance Conference.
Basu said banks have been dealing with the NBFC situation for the last few months and while the sector faces difficulties, these are not extremely grave. “There are one or two entities that are more severely affected and they need to address it. Both the RBI and the government have taken a few steps and are contemplating taking some more; we will have to wait and see," said Basu.
As on 31 March, 2019, SBI’s NBFC exposure stood at ₹1.87 trillion, of which housing finance companies (HFCs) comprised ₹62,511 crore. At the end of the same period, exposure to central and state government-backed NBFCs was at ₹63,033 crore, and another ₹67,226 crore are backed by large private sector institutions.
The bank said in a statement on 6 June that it has been very closely monitoring its exposures in the NBFC sector for the past 10 months and taking appropriate actions. It said the overall quality of the NBFC asset portfolio in its books continues to be good.
“Challenges faced by accounts like DHFL have already been factored in when we have given our estimate for the stress that the bank would have to deal with in FY20 and included in our estimates for slippage and loan loss provisioning for the current financial year," the statement said.
Basu said on Friday that Reserve Bank of India’s (RBI) 7 June circular on stressed assets is just a guidance and SBI would like to resolve these cases as soon as possible, in any case. “That process never stopped. For us it is never a challenge because it strengthens our hand," he said, adding that timelines prescribed by RBI should never be a challenge for banks.
