State Bank of India to offload up to Rs 4,000 cr bad loans to ARCs



India's largest banker State Bank of India is selling off its non-performing assets (NPA) of around Rs 3,500 -4,000 crore for the financial year 2013-14 to asset reconstruction companies (ARC).

"We are selling NPA between Rs 3,500-4,000 crore of NPA," SBI chairman and managing director Arundhati Bhattacharya said last evening at IIM Calcutta.

SBI has total bad assets of Rs 67,799 crore. It had reported 5.73 per cent of its assets as bad loans in the October-December quarter.

It had said earlier that there were 14 ARCs functioning and many of them had been invited to pick up stressed loans.

Normally ARCs pay 5-10 per cent of the total bad loans being bought in cash and the rest could be security receipts (SRs). This helps banks to take the equivalent NPA figure out of books and make an yearly provision for recovery or actual

cash payment.

"We will make yearly provisions and adjust it on mark-to-market basis," Bhattacharya said.

She said that the first quarter outlook for 2014-15 would remain sluggish and there would not be much credit growth.

Regarding predictions of a poor monsoon because of the El Nino effect, she said "Let us keep our fingers crossed on the prospect of monsoon this year. But one thing is reassuring the ground water levels stand sufficiently recharged by the last rains."
Source-financial express

SBI General Insurance sets 60% premium growth target this fiscal

The company’s managing director says it will require some capital infusion from promoters in the current financial year. Photo: Pradeep Gaur/Mint
Mumbai: SBI General Insurance hopes to maintain its growth momentum of recent years and has set a 60% target in premium growth in the 2014-15 fiscal.
The subsidiary of the country’s largest lender State Bank of India (SBI) had a gross written premium of Rs.770.85 crore in FY13 and has registered around 55% rise in premium at around Rs.1,200 crore in FY14.
“In this fiscal, we expect to grow at around 60%, which we feel is reasonable,” managing director and chief executive Bhaskar J. Sarma said.
He said any pick-up in industrial activity and automobile sales will support growth further.
According to the general insurer, while the motor insurance segment comprised around Rs.465 crore of the total premium, fire contributed aroundRs.412 crore with the rest coming from health and other segments in FY14.
“This fiscal, our focus will be on motor, health and commercial lines among other things,” Sarma said, adding that the company will also focus on increasing the marine insurance pie during this period.
The general insurer, which has filed some products in the health insurance segment, will also launch these after receiving approval.
SBI General Insurance, which draws around 60% of its business from the banking channel, also said it would focus more on other channels like brokers.
“We want to focus on the brokers and agency channels this fiscal. Our focus on the banking channel will also continue which has given us good result in the initial period of our operation,” Sarma said.
About financials, he said the combined ratio of the company came down to around 130% in FY14 from 210% in FY13, which means that the company spent Rs.1.30 for every rupee it earned last fiscal. Its loss ratio was close to 75-80% during last fiscal.
Sarma also said the company will require some capital infusion from promoters in the current financial year.
“We will require some capital in the current fiscal from promoters,” Sarma said, adding the amount is yet to be determined.
SBI General Insurance is a joint venture between State Bank of India and Australian insurer Insurance Australia Group Ltd with SBI holding the majority stake.
Source-live mint

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