SBI all set to divest non-core assets to rake in Rs 3,000 crore
Faced with rising bad assets, banking major SBI will divest non-core investments of around Rs 3,000 crore to shore up its capital. Despite the challenges that SBI faced last fiscal, the bank, however, is well capitalised to "absorb future shocks" and maintain future growth trajectory, according to the state-run lender's Annual Report for 2015-16.
Asset quality pressures accelerated during 2015-16 due to continued stress in the economy, declining commodity prices and two successive drought years, SBI Chairperson Arundhati Bhattacharya said in the Annual Report.
"With the passage of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 a missing link of institutional intervention has been addressed, which will speed up the recovery process", she said. Also with the passage of the Bankruptcy Law, resolution of stressed assets is expected to become more systematic and timely, she said.
SBI had reported over 66 per cent fall in net profit for January-March quarter of FY2015-16 due to more than two-fold rise in provisioning for bad loans. The bank faced slippages of about Rs 30,000 crore in the quarter.
The bank, however, said that the current fiscal looks "more promising". "FY17 is expected to be more promising than the previous year primarily because a regime of clear and stable policy environment is now evidently visible", Bhattacharya said.