Mumbai: The chairman of State Bank of India (SBI) O.P. Bhatt spoke in an interview about the bank’s June quarter results. Edited excerpts:
What were the factors that affected your net interest income this quarter?
The main factor is that post-October, (SBI) was actually under a deluge of deposits. In fact, there were weeks on end when we were getting upwards of Rs1,000 crore of deposits every day and this is the kind of money which I don’t think any bank anywhere in the world has ever got. So while deposits were going up by this huge amount, from that time onwards till today, credit offtake has not taken. So we have got huge deposits.
We were putting as much as about Rs65,000 crore in reverse repo, sometimes even more than that, with the Reserve Bank of India. So the cost of deposits has gone up by about 38% or so, whereas income from advances has gone up only by 23%. However, in the present situation in global and in Indian markets, the best bet for a bank is to have high capital and high liquidity; we have both at the moment.
What about non-performing assets (NPAs) and provisioning?
Let me tell you that our provisioning is entirely in accordance with what the regulator prescribes. Now if despite that the requirement for our provisioning comes at a lesser percentage, all it means is that the quality of our NPAs are healthier than those institutions where the required provisioning comes to a higher percentage. Having said that, between the last quarter and this quarter, the provisioning has gone up from 38% to about 45%, which means the provisioning has gone up by 700 basis points (one basis point is one-hundredth of a percentage point). With regard to NPAs, where they will settle, it is a slightly difficult question to answer because it all depends upon how the economy will fare in the near future.