MUMBAI: India’s largest lender State Bank of India (SBI) is gearing up to a massive divestment plan offloading stake in non-core entities. The move to monetise assets via partial divestment in select subsidiaries is part of SBI’s strategy to meet capital needs as well as global risk norms.
“SBI owns and manages several non-banking subsidiaries that are among industry leaders in their own right,” SBI said in its latest annual report. “We believe that we will be able to unlock huge value in these businesses,” the report said.
It may be noted that just last fiscal, the state-run lender raised `5,436 crore by selling 8 per cent stake in SBI Life Insurance Company, valuing it at `70,000 crore.
“The bank has many similar subsidiaries, which have the potential to deliver future value... These non-core assets are fundamental to the nation’s financial market’s infrastructure,” it noted.
As on March 2018, SBI has 20 non-banking subsidiaries, where it holds stakes between 30 per cent and 100 per cent.
Besides, it also has 11 joint ventures and foreign banking and non-banking subsidiaries where it’s holding is between 9 and 100 per cent.
Meanwhile, on stressed assets, which have been the biggest challenge to growth, SBI said it has put in place a “multi-pronged approach to arrest fresh slippages by adopting technologically advanced underwriting practices for asset selection.”
The bank set itself a credit growth target of 10-12 per cent by 2020, which it hopes to achieve by reorganising its corporate banking portfolio and by reducing its ratio of credit risk-weighted assets to total advances.
According to the report, SBI expects a majority of the stressed assets resolution process of the 12 accounts identified by the Central bank to be completed by June.
Similarly, the second list comprising 29 accounts is likely to be resolved by March 2019. In all, SBI has accounts worth `77,626 crore for resolution under the Insolvency and Bankruptcy Code, for which its provision cover stood at 63 per cent as against the regulatory requirement of 50 per cent.