Financial Daily from THE HINDU group of publications
Friday, Apr 18, 2003
Financial Daily from THE HINDU group of publications Friday, Apr 18, 2003 |
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Money & Banking
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Non-Performing Assets Early detection helps SBI cut NPAs by Rs 1,500 cr Rukmani Vishwanath
MUMBAI, April 17 STATE Bank of India has reduced its net NPAs by more than Rs 1,500 crore in the fiscal ended March 31, 2003. Bank officials said this was a significant achievement compared with the previous year when the drop in net NPA was only Rs 600 crore. The bank has made cash recoveries of around Rs 1,000 crore and also brought down gross NPAs by two per cent, details of which are not available. The net NPAs as on March 31 are below five per cent of the total advances. Bank officials said early detection of potential problem accounts had enabled the bank to reduce its NPAs. Last year, the Reserve Bank of India had asked banks to a set up new asset category, called `special mention accounts' for early identification of bad debts. The idea was to bring loans and advances overdue for less than one quarter and two quarters under this category, for internal monitoring. The `special mention' assets do not require provisioning, as they are not classified as NPAs and are not to be brought under regulation immediately. Following this, SBI put in place its own internal strategy for early detection of doubtful assets. According to officials, as per this strategy, if the interest on an account is not serviced, the branch will first alert the local head office who beyond a point will send an `SOS' to the central office. The bank is also understood to have set up a high level committee comprising the Chairman, the Managing Director, and top management of SBI, to closely monitor such cases. Most other banks are also understood to have put in place such early detection systems for the internal monitoring of accounts. Bankers contend that the figures on recoveries enabled by the Securitisation Act would be known by next year.
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