Our exposure to telecom sector is non-funded and is completely safe: Rajnish Kumar, SBI

Rajnish Kumar, Chairman, State Bank of India (SBI), talks about the bank’s exposure on telecoms, fundraising plan of up to USD 1.5 billion and moratorium that was granted by RBI and its impact on the bank’s books during an exclusive interview with Swati Khandelwal, Zee Business. Edited Excerpts:

Supreme Court in its hearing on the adjusted gross revenue (AGR) issue asked the telecoms to bring guarantees and adjourned the matter till June 18. Can you tell about the kind of exposure that your bank has on telecom companies and is the bank in a condition, where it can offer guarantees?
If we get any such proposal before or after June 18, 2020, from the companies especially Vodafone Idea that has major issues than we may consider the proposal on commercial terms and look forward to the conditions on which we can provide guarantees to them or not. The decision will be taken by the board of the bank. 

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Tell us about the kind of exposure that SBI has in the telecom sector?
The bank’s exposure to the telecom sector has been declared in our annual report. Most of the exposure in the telecom sector is a non-funded exposure and we do not have any concern about it but the market may have its own perception related to it. But, our exposure is a non-funded exposure and I feel that it is completely safe. 

State Bank of India (SBI) in the recent past has approved long term fundraising of up to USD 1.5 billion through a public offer and/or private placement of bonds. Please tell us how much your cost of borrowing will be affected due to this fundraising?
State Bank gets the finest rate whenever it borrows from the international market. This is our running programme, which renews annually thus nothing is new in it. But, I can say that State Bank keeps two things in the mind whenever it goes into the market and they are – that the bank establishes a bank assurance for the Indian companies in international markets and it has never faced any challenge in raising money at competitive price from the international market. 

How many customers have availed the moratorium that was provided by the RBI and can you tell us the kind of provisioning that the bank will have to do? 
State Bank, while announcing its results, has said that about 82% of people have deposited at least two instalments in their accounts. As far as provisioning is concerned then it will be known only in September but the bank’s portfolio has been structured in a way that it mostly includes people whose salaries hasn’t seen any major impact due to COVID and it includes majorly government employees central and state, defence, teachers. Their salaries get delayed at times but it reaches and accounts remain good. In addition, we will make a full assessment of the things on June 30, 2020, and if required then the bank will make an assessment of the provisions of June and September quarter and then divide it into two parts, June and September. Fresh slippages at the bank will be very low due to the relaxation granted by the RBI in the form of the moratorium. The requirement of provisioning due to ageing is very low, that’s why we will try our best to do a proper assessment and complete the required provisions in just two quarters, June-quarter and September-quarter. We do not have any concern related to it and can happily say that we will be able to maintain our asset quality. 

A case related to the interest payment on loans during the moratorium is being heard in the Supreme Court. How the bank’s books will be impacted if you have to waive off it completely? 
We haven’t made any calculations on it. If the bank has to make any submission, then we will do it in the front of the Supreme Court and wait for the judgment. 

Watch full interview below:

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SBI’s Q4FY02 net profit rose just because of the one-time gain of Rs 2,371 crore from the sale of its stake in SBI Cards. How will you put this operationally and also update us about the credit growth as we have heard that you have said earlier that we have money but no one is coming to us to take it?
As far as the bank’s performance is concerned than its valuation and assessment should be done after removing the exceptional items from it and then look at its growth through the pre-provisioning operational profit. The bank’s CAGR, at present, stands at 10%, the pre-provisioning operating profit and exceptional items are excluded. It sends a signal that the State Bank has the capacity to increase its pre-provisioning operating profit. As far as one-time item is concerned then it comes on income-side as well as on the expense-side. There was a rate cut in the corporate tax and we moved on a new tax rate under which the loan loss provision was zeroed due to which we have paid extra tax of Rs 600 crore. So, if you are talking about the profit after tax then this is also an exceptional item. Thus, the bank’s balance sheet and its performance can be analyzed only after looking at the exceptional items from both sides. That’s why I have always said that the bank’s pre-provision operation profit is a good indicator and it should be taken into consideration every time the bank’s performance is analyzed.