Stating that the stress in the mid-corporates in the recent past has come down, State Bank of India (SBI) chairperson Arundhati Bhattacharya said even the larger of the SMEs (small and medium enterprises) are beginning to show less stress.
SBI chief, expressed concerns about giving fresh loans to accounts which have become non-performing assets (NPA) and said the banks do not have any incentive by doing so.
“You can say the regulator has allowed it, that it was required in order to revive (the account), but the question is that it is very difficult to manage. As a result, most banks don’t have any incentive once it’s treated as an NPA to do anything about it,” she said.
She said the moment an account is declared NPA, giving further money to it, and very often this is required for stressed assets, becomes almost impossible.
Citing reasons, Bhattacharya said, “One, you will be actually bloating up your NPA numbers further by giving it more money. Second, if you look at the PSBs and the kind of questioning they have to go through – If it is NPA, why did you give it more money? What is the reason you have given money?”