SBI NPA provisioning up 3-fold from 2008-09 and 2010-11

The government today said provisioning against the non-performing assets (NPAs) of State Bank of India (SBI) increased more than three-fold to Rs 8,792 crore in 2010-11 from Rs 2,474 crore in 2008-09 due to a rise in bad debt.

This provision in 2010-11 includes a countercyclical buffer of Rs 2,330 crore toward achieving the 70% Provision Coverage Ratio prescribed by the Reserve Bank of India over-and-above the prudential provision, Finance Minister Pranab Mukherjee said in a written reply to a question in the Rajya Sabha.

The NPAs have gone up substantially in agriculture, small scale industries and corporates, he said.

During 2010-11, outstanding loans of Rs 210.34 crore given by SBI to Shah Alloys Ltd turned into NPAs. At the same time, an outstanding loan of Rs 193.99 crore to Indorama Synthetics became a NPA, he said.

Meanwhile, in a separate written reply, Minister of State for Finance Namo Narain Meena said the government has received a proposal from SBI for raising capital through various instruments -- Qualified Institutional Placement (QIP), Preferential Allotment, a Follow-On Public Offer and a rights issue. The proposal is under examination, Meena added.

In response to another question, Meena said in line with the principles of preserving the long-term value of the country's foreign exchange reserve in terms of purchasing power, minimising risk and volatility in returns and maintaining liquidity, the RBI holds foreign currency assets (FCAs) in major convertible currencies' instruments.

These include deposits of other countries' central banks, the Bank for International Settlements (BIS) and top-rated foreign commercial banks, besides securities representing the debt of sovereigns and supranational institutions with a residual maturity not exceeding 10 years, Meena said.

At the end of March, 2011, Meena said out of the total foreign currency assets of $274.3 billion, $142.1 billion was invested in securities, $126.9 billion was deposited with other central banks, the BIS and IMF and $5.3 billion was placed with External Asset Managers.

Source: Business Standard