BHUBANESWAR: Amid mounting bad loans plaguing the banking system, the State Bank of India (SBI) has set up an intermediary mechanism to review sectors of exposure. The bank expects a recovery of around 53 per cent of its exposure in the Reserve Bank of India’s first list of 12 stressed accounts referred to NCLT for corporate insolvency resolution, an official said on Friday.
“The review mechanism, which started functioning two months ago, would calculate the probability of default of an exposure and thereafter decide if it would be prudent to go ahead or not. We’re expecting a recovery of about 53 per cent and will take a haircut of 47 per cent without impacting the balance sheet,” said SBI managing director Dinesh Khara, adding that the average provisioning for these cases will be around 55 per cent.
Khara also said SBI would be able to make adequate provisions for the second list of NPAs by the time these cases are heard in NCLT. “We have 75 per cent provisions already in place in the second list. By the time they are heard, we are confident of making 100 per cent provisions,” he said.