Pratip Chaudhuri, Chairman of State Bank of India (SBI) informed that the total impact of Reserve Bank of India (RBI)’s revised norms on provisioning for non-performing assets (NPAs) and restructured loans would be about Rs 200 crore a year.
He said this would be less than 1 per cent on a PBT (profit before tax) basis and hence it may not have a significant impact on SBI’s profitability.
It may be recalled that the central bank raised the provisioning requirement for bad loans and restructured advances recently.
The new norms mandates that all loans restructured after April 1, 2015, be classified as non-performing assets. Also, from June 1 this year, the provisioning requirement for fresh standard restructured advances has been raised from 2.75 per cent to 5 per cent. For existing restructured loans, provisioning would be increased to 5 per cent through three years.
Meanwhile, Chaudhuri said the bank would take into account the action of its rivals while deciding on reducing retail deposit rates. He added the scope to reduce retail deposit rates in the near term appeared remote. Recently, the bank had cut bulk deposit rates. He expressed concern over the prolonged slowdown in the industrial sector.