SBI launches new scheme for NPA settlement, THE FINANCIAL EXPRESS, 26

AUGUST 2010

State Bank of India (SBI) has launched a unique scheme — RBI-One Time Settlement II — to
accelerate recovery of dues from non-performing accounts.

According to an SBI press statement issued here on Tuesday, RBI-OTS II, is more liberal than the earlier
settlement schemes. The new scheme will be applicable to non-performing accounts with outstanding
balance up to Rs 25,00,000 (principal) as on March 1, 1998. The scheme will cover all sectors and its
guidelines will be in force till June 30, 2002.

SBI claims that this instant settlement formula under RBI guidelines is much more liberal than the earlier
one-time-settlement schemes of RBI and SBI, which covered amounts up to Rs 5 crore and Rs 1 crore,
respectively.

Under the present scheme, only principal outstanding as on March 31, 98 will qualify and the interest
outstandings will not be applicable.

SBI to raise NPA cover if needed ,

BUSINESS STANDARD, 26 AUGUST 2010,Press Trust Of India / Mumbai July 21, 2009, 0:24 IST

The country’s largest lender, State Bank of India (SBI), On Monday said its provisions on bad loans were
adequate, but the cover might be increased if the need arose.

The Reserve Bank of India recently asked the lender to increase the provision coverage ratio (PCR) of
38.72 per cent, which is far below the industry average, to 50 per cent at least.
“Generally, the PCR is 40 per cent. But the apex bank has been indicating that it should be at least 50 per
cent,” SBI Chief Financial Officer S Ranjan said. Ranjan attributed the low provisioning to a single large
account, which had earlier been classified as a non performing asset (NPA).

“That (low PCR) is because one account, Dabhol, got classified as an NPA last year. It will now be re-
classified as a standard asset. Automatically, the provision will go up to 43 per cent,” Ranjan said. The
lender was also seeking options to further hike the provision coverage and will evolve policies to
execute the plan, he said.

He asserted that there is no dangerous signal with regard to NPAs in the bank and said it has adequately
provided for covering of its bad loans.

Higher NPA provisions hit SBI profits

State Bank of India missed forecasts with a 4.5 per cent fall in third quarter profits following a sharp rise
in provisions for bad loans. The bank more than doubled provisions for contingencies and bad loans in
the quarter to Rs 1,166 crore from Rs 470 crore a year earlier. The net profit declined to Rs 1,065 crore
for the quarter ended December, down from Rs 1,115 crore a year earlier when it had some tax
payments refunded to it and made currency gains. The bank said its net interest margin, excluding one-
off items, improved by 44 basis points to 3.29 per cent for the nine months ended December. ICICI Bank
had last week reported a 42 per cent rise in net profit. With the SBI results falling below market
expectations, its shares fell by 4.5 per cent to Rs 1,168.75 on selling pressure.