www.livemint.
com 07 FRIDAY, APRIL 8, 2011, DELHI
mint Corporate News
ABHIJIT BHATLEKAR/MINT
Will you continue with the special our exposure to real estate is
home loan schemes in the future? probably less than 1% of our
We are awaiting the re- portfolio. Our exposure to the
sponse from RBI. After we hear sector has actually shrunk this
from them, we will take a final year. It is not a sector we have
call on the continuation of that got into in a major way.
product. SBI has been opposing the savings
How much additional provisioning rate deregulation.
will you have to make? We are not in favour of sav-
The normal provisioning for ings rate deregulation. Savings
home loans is 0.4%. For teaser banks is a product which is
loans, RBI has said that we similar to a current account,
have to step it up to 2%. For which can be used by custom-
teaser loan alone we need to er almost at will without any
provide 1.6% of the portfolio. restrictions on that. This is a
Apart from that, we have stable deposit base for Indian
been given a schedule to step banks. In fact, a large portion
up the provision coverage ratio of this is treated as long-term
(PCR) to 70% by September. core deposit. These core de-
It was 64% in December. We posits are used for funding
will take it up to 66.3% in long-term projects.
March. To attain 70% PCR, we If the savings bank rates are
may have to do `1,200-1,300 deregulated, then the interest
crore by September. rates will start fluctuating and
Is there any precedent of a bank it will make the product very
taking on the regulator? volatile. It will affect banks’
I don’t know whether there ability to fund long-term pro-
is precedence like this. But I jects. This is a very serious im-
think it is not a show of defi- plication for that.
ance. We felt that our stand Some of the banks have started
was right. We gave valid argu- cutting deposit rates.
ments. We have differences, After the last hike in RBI’s
but and it’s not that we have policy rates, we said that we
been openly defiant. are not going to hike deposit
Careful lending: Contractor says SBI is not overly concerned about its exposure to the telecom sector in relation to the allocation of 2G spectrum. Will you go to court on this? rates for the time being. We
We will respect the final will review the position. As of
HEMANT CONTRACTOR/STATE BANK OF INDIA opinion of the regulator and now, there is no plan to reduce
we will abide by that. There is rates.
We’ll need around `21,000 cr
no question about that. Has the successive rate hikes by
What will be the capital require RBI affected the investment senti
ment of SBI in the medium term? ment in India?
Given our current rate of There has been a slowdown
growth, we will need around in investment activities, but I
capital in next threefour years `21,000 crore in the next three
to four years. Rights issue is
what we have in mind now. We
also intend to keep on visiting
the market with retail bond is-
will not attribute that to the in-
creases in interest rates.
First, not all the increases
have been passed on to the
borrowers. RBI has hiked its
B Y D INESH U NNIKRISHNAN
dinesh.n@livemint.com
mint INTERVIEW time. We grabbed that oppor-
tunity and restructured quite a The rise in NPAs
sues, which helps us raise
money as tier II capital. These
rates eight times last one year.
Banks have increased their
························· few loans. are tradable instruments as rates on three or four occa-
MUMBAI
improvement. You might have At the same time, we have is a combination well, which makes it more at- sions in some cases. The entire
H emant Contractor,
chief financial officer
of the country’s largest
lender, State Bank of India
noticed that in December quar-
ter the gross NPA has actually
come down. In terms of other
NPA parameters, too, we have
been growing our loan book,
with a compounded growth
rate of 14-15%. That itself bring
in a natural growth in NPAs.
of both the
slowdown in the
tractive for the retail customer.
We may come with the next
round of issue in three to four
months.
increase has not been passed
on to the borrowers. Quite a bit
has been absorbed by banks
themselves.
(SBI), is tipped to be one of its
managing directors. In an in-
started showing an improve-
ment. We expect this to contin-
The rise in NPAs is a combina-
tion of both—the slowdown in
economy and the Many telecom firms are being in
vestigated in relation to the alloca
Does that mean that banks will see
impact on their net interest mar
terview with Mint, Contractor
speaks about a range of issues
ue in the current year as well.
Our NPAs are slightly higher
the economy and the growth in
our loan book.
growth in our tion of secondgeneration (2G)
spectrum. Has this changed the ap
gins, or NIMs, and profitability?
That may happen this year.
from managing non-perform- than the industry average, but The growth in SBI’s home loans loan book proach of SBI towards the telecom There could be a slowdown or
ing assets (NPA) to giving we have taken a lot of measures has been quite aggressive in last sector? small shrinkage in the NIMs in
loans to telecom companies. to bring the issue under con- year. We have always been very the financial year 2011-12. We
“So as far as our exposure to trol. Those measures are now Our home loans have grown careful in lending to these had good NIM of 3.4% in De-
the telecom sector is con- beginning to take effect. at 24-25% in fiscal year 2011. other home loan products. It companies. We have given to cember. In March, I do not ex-
cerned, we are not overly con- What are these measures? It’s not abnormally high. But, was certainly not comparable telecom companies project pect much of a change.
cerned about that. No new All our branches have been yes, we have been growing to subprime loans in the US, loans for rolling out the 2G op- There has been a delay in appoint
proposals are coming. But if a activated to look at the NPAs faster than the industry. There where the characteristics of erations. For one or two com- ments to key posts. Is it affecting
viable good proposal comes to more closely and special teams is no particular concern about the product was quite differ- panies it’s for 3G (third-gener- the bank’s operations?
us, we will still look at it,” he have been deployed to oversee the quality of our home loans. ent. ation). Repayment capacity of These things take time and it
said. Edited excerpts: the high value NPAs. Senior of- SBI is now the largest mortgage We felt that calling them the company and the roll-out is a process that is followed in
ficials look at all substantial lender in India, ahead of Housing teaser loans and treating them plans are taken into account the government. Also, this is
What is the most critical challenge NPAs individually. There are Development Finance Corp. Ltd. on a par with the teaser loans when we give loans. not the first time that a long
before the bank? constant reviews at all levels. I’m not sure about the latest in the US was not appropriate. We are not overly concerned period of waiting is happening.
The most critical challenge Are these NPAs a result of a sub numbers. But, yes, we did over- Therefore, we took it up with about our exposure to the tele-
is talent management. We are stantial amount of loan restructur take them some time last year. the RBI. They have a certain com sector. Unfortunately,
a very large organization and ing or aggressive expansion of loan RBI wants banks to set aside an point of view; they are the reg- what we have seen in the re-
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we have been growing at a fair- book? additional 2% provisioning on the ulator and we have to abide by cent past is because of these is-
ly brisk pace and diversifying We were partly affected by socalled teaser loan, but you ha what they say. sues, companies have gone VIDEO
our activities that requires a lot the slowdown in the economy ven’t done it. What have you told the regulator? into a shell. No new proposals
of skills at all levels. We need that took place in 2008-09. The way we looked at the We are saying that it should are coming. But if a viable Hemant Contractor talks
adequate number of people, There was a certain amount of special home product is that it be treated on a par with other good proposal comes to us, we about SBI’s loans, its
which is the biggest challenge. restructuring done, largely to did not carry a higher element home loans and not subject to will still look at it. nonperforming assets,
There are concerns about the high take advantage of (the) Re- of risk as RBI perceived it. additional provisioning. We Your approach to the real estate and other issues.
level of NPAs in SBI. serve Bank of India’s (RBI) Therefore, we put forward our have given the reason that it is sector?
As far as the NPAs are con- special dispensation, which case to RBI that it should not not riskier than other home We never had much of an ex- www.livemint.com/hemant.htm
cerned, we are showing a lot of was available at that point of be treated any differently from loan products. posure to real estate. In fact,
OVERSEAS ASSETS Legacy Iron Ore’s chief exec- 28.52 mt in the previous year. NMDC is in an advanced
utive Sharon Heng confirmed The company will need as- stage to bid for coal mines
NMDC names law firm for due the due diligence was on, but
didn’t say if it was being done
by Blake Dawson for NMDC.
sured supplies of iron ore and
coking coal as it plans to build
its own steel plants.
owned by Kolmar Coal Co. of
Russia and in the early stages
of scouting for similar resourc-
diligence of Australia iron ore “Please be advised that we
are not in a position to disclose
any information at this stage
except that due diligence is be-
Reserves of iron ore in the
Australian blocks are yet to be
identified but “Western Aus-
tralia is rich in iron ore”, the
es in the US and South Africa,
company officials had said ear-
lier.
The company is engaged in
B Y R UCHIRA S INGH (Australian) companies in a board had cleared the acquisi- ing carried out,” Heng said in person quoted above said. gold exploration in Tanzania’s
ruchira.s@livemint.com month or two,” this person tion of two iron ore assets in an emailed response to ques- An analyst with a Mumbai- Bulyang’ Ombe and Sega Hill,
························· said, asking not to be named. Australia. tions. based brokerage said NMDC’s its only exploration activity
NEW DELHI Rana Som, chairman and Blake Dawson’s national India’s iron ore production efforts to secure resources are overseas currently, its 2009-10
N MDC Ltd has appointed
law firm Blake Dawson to
conduct due diligence of two
managing director of NMDC,
did not confirm the appoint-
ment of Blake Dawson, but
media manager Lisa Macna-
mara did not offer any com-
ment when contacted.
of more than 200 million
tonnes (mt) per year is suffi-
cient now, but projections of
positive for the stock but
shareholders would look for
the price NMDC pays and the
annual report said.
The miner has begun setting
up a 1 mt steel plant in Chhat-
iron ore assets in Australia, in said the company’s pursuit of One of the two Australian higher demand for metals such amount of reserves it gets for tisgarh that will be upgraded to
what could lead to the state- overseas iron ore and coal as- companies in which NMDC is as steel in the world’s second it. 3 mt, and has signed an accord
owned miner’s first purchase sets was on track. “We are op- seeking to buy a stake is Lega- fastest growing economy are “It will be positive news for with Russia’s Severstal OAO to
of overseas exploration blocks, erating (looking for assets) in cy Iron Ore Ltd, said the person driving Indian miners overseas shares, but merely acquiring build another steel plant in
said a person familiar with the about six-seven areas in Aus- mentioned earlier. The com- for more raw material. Iron ore assets may not push up Karnataka.
development. tralia, Russia, South Africa and pany plans to set up mines in is a key ingredient in making shares,” said Alok Agarwal, Its overseas asset purchase
“If all goes well, the compa- the US,” Som said. the next two years in partner- steel. head of institutional research for coal is partly driven by its
ny could be acquiring signifi- Som had told news agency ships after completing the ex- NMDC’s iron ore production at Mata Securities India Pvt. need to secure supplies of cok-
cant sizes of stakes in two PTI in February that NMDC’s plorations. fell to 23.8 mt in 2009-10 from Ltd. ing coal for its steel plants.
