SBI to tread cautiously on corporate lending - Hindu Business Line

No significant improvement in investment front in corporate sector: Chairman Kolkata, May 23:   State Bank of India will exercise more caution on lending to large and mid-corporate segments. The bank plans to tighten entry norms for mid-corporates by making the credit selection process "stiffer". R Venkatachalam, Deputy Managing Director and Group Executive-Mid-Corporate, said the bank would lend only to companies which fall under "investment grade or above" in both these segments. "We are going only for investment grade and above companies. In fact, in the last three-four months we have not been lending to companies which are below investment grade," Venkatachalam said. Pratip Chaudhuri, Chairman, SBI, said: "The mid-corporate segment is still reeling under pressure due to difficult economic conditions. Lower profitability is rendering it difficult for the companies in the segment to service their interest liability." Nearly 85-88 per cent of the bank's total lending to the sector is to companies above investment grade or above (BBB rating or above). SBI's lending to large and mid-corporate segments grew year-on-year by 40 per cent and 18 per cent respectively as on March. On the outlook for growth in the corporate sector, Chaudhuri said, "Right now we have seen some marginal improvement in corporate loans and capex as compared to July-August 2012, however, there is no significant improvement on the investment front." There has been a substantial deterioration in the bank's restructured loan book during the year with nearly 25 per cent of such loans slipping into NPA. "In restructuring, the problem is quite serious as most of the sectors are having a demand constraint. It might take a long overhaul for accounts that have fallen in the sub-standard category," Chaudhuri said. The bank, till now, was witnessing nearly 10-12 per cent of its restructured loans slipping into the bad loan category. During the January-March period, SBI restructured two big accounts — Reliance Power's Sasan project amounting to Rs 1,060 crore and Suzlon Energy's loan of Rs 1,600 crore. Total restructuring during the quarter was nearly Rs 8,669 crore. SBI expects to restructure close to Rs 5,000-crore loans in the next three-four months. shobha.roy@thehindu.co.in via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNHg2ctEUWHpIOpPZRBoD6jrHEkv3g&url=http://www.thehindubusinessline.com/industry-and-economy/banking/sbi-to-tread-cautiously-on-corporate-lending/article4743359.ece?ref=wl_industry-and-economy

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