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NPAs to dip on high industrial capacity utilisation, says SBI chief

state bank of india logoThe stressed assets level in the banking Sector will take a dip, once the key industrial sectors start functioning at their optimum capacity, according to SBI Chairperson Arundhati Bhattacharya.

Speaking during a media interaction in Gujarat’s Gandhinagar city on Monday, she said most industrial units are working at 60 to 65 per cent of their capacity against the desired 80 to 85 per cent.

Explaining the concept of NPAs, she said: “NPAs will start coming down as the demand comes back in the economy and then you see more and more capacity utilisation, which is still sub-optimal. Be it manufacturing units or power plants, most of them are running at around 60 to 65 per cent of their capacity.”

Bhattacharya was in Gandhinagar to attend the foundation stone laying ceremony of SBI’s Local Head Office (LHO) at Gujarat International Finance Tec-City (GIFT City).

The 14-storey tower will come up at an investment of Rs 100 crore. Upon completion, current LHO in Ahmedabad will be shifted here.

During her visit at the GIFT City, Bhattacharya also inaugurated SBI’s IFSC Banking Unit (IBU) at International Financial Services Centre (IFCS) in the GIFT Special Economic Zone.

Reacting on the recent announcement about the merger of SBI and its subsidiaries, Bhattacharya said the merger is essential in the wake of tough competition from Non Banking Financial Companies (NBFCs).

“The merger is essential, because today banking is evolving at very fast rate. You face competition from not only other banks, but also from NBFCs. In order to sustain profitable growth, it is important for us to consolidate, because small organisations do not have such strength or capital,” she added.

Commenting on a recent report that employees of some banks were depositing money from their pockets into Jan-Dhan accounts, Bhattacharya said , “I am not aware of this fact. It is not something which happens in our bank, and I can assure you on that.”

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