SBI: Rs 1500 cr bad loan of 1 firm, AI not be an NPA before April

Reporting a massive 85 per cent rise in provisioning against non-performing assets, State Bank of India today said one company alone accounted for Rs 1,500 crore of bad loans in the quarter ended December, 2011.

It also noted that Air-India will not become a non-performing asset before April.

"Out of the total fresh slippages, as much as one-fourth or one fifth has come from a single company. So, if you look at the total slippages (net increase) of Rs 6,152 crore, one company alone accounted for around Rs 1,500 crore," SBI Chairman Pratip Chaudhuri said without naming the the company.

It may be recalled that in early January State Bank of India (SBI) had called the Vijay Mallya-led Kingfisher Airlines a non-performing asset. SBI is the the largest creditor to cash-strapped airline.

For this one company, the bank has to set aside Rs 1,200 crore as provisions for this quarter, he said. The bank reported 85 per cent rise in provisioning against bad loans in the December quarter.

Chaudhuri, however, ruled out any hit from exposure to Air India to which SBI has extended a fully secured Rs 1,100 crore loan as cash credit facility.

"If the debt servicing by Air India does not happen this quarter, we will not have to declare it as NPA as they have been servicing till January 31. It won't become a NAP before April.

On the Air India account, he said as of January 31, it is standard.

"The GoM is meeting soon and the AI restructuring will happen post that meeting. There will not be any write down for banks. The entire restructuring exercise is being attempted, planned and implemented in a manner that it does not involve a write down for banks and particularly State Bank," he said.

However, Chaudhuri noted that the aviation sector is at the end of its bad story.

"With the steps that have been rolled out by the government like direct import of ATF, FDI being increased to 49 percent and government recognizing aviation as a major activity for connectivity and being so committed, so we think there will be a number of administrative, policy and taxation steps from which will make the outlook for the aviation industry better going forward.

"We do not expect any deterioration in Q4 from this sector, if possible we may also look forward to some improvement," he said.