The country's largest lender, State Bank of India's total restructured loans could become bad debts. On this matter, the chairman of SBI, Mr. Pratip Chaudhuri said that out of the bank's total restructured loans, about 18-20 percent could become non performing assets.
For the financial year 2011-12, the bank's books show the total restructured loans to be Rs 37,168 crore. Mr. Chaudhuri further said that out of the total NPAs, only 4-5 percent result in complete loss due to non repayment of the loans.
It is expected that the bank's new gross non performing assets will increase by Rs. 5000 crore and net non-performing assets will increase by Rs. 3000 crore.
Recently, State Bank of India slashed its loan rates for corporate borrowers, micro small and medium scale enterprises (MSMEs) and farmers by 3.5 percent.
It has also reduced interest rates on loans given to exporters by 0.50 percent. On this issue, Mr D. Sarkar, Chairman and Managing Director of Union Bank of India, said, "Export credit rate is a function of demand from exporters. If rate cut can be compensated by sufficient volumes, then the bank will not have any problems in cutting rates."