The Reserve Bank of India (RBI) has raised a red flag on the surge in non-performing assets (NPAs) under the Pradhan Mantri Mudra Yojana (PMMY). As per the central bank data, bad loans rose to Rs 11,000 crore under the scheme. Prashant Kumar, CFO and deputy MD of State Bank of India (SBI), shared his views on the same.
“Mudra scheme is for small micro, small and medium enterprises (MSME) loans. I think we see even in the past, MSME is a little higher NPA percentage, always in the MSME. This is not like this issue is very critical. All the banks need to improve in terms of financing MSME sector,” Kumar told CNBC-TV18 on Monday.
“Our book is a very small percentage of the total book and NPA levels are still higher, almost 8-10 percent in the MSME sector. So we are not expecting any further increase in the NPAs in this. Rather we would be in a position to control it better,” he added.
Talking about the bank's provisioning, Kumar said, “We are not expecting any further higher defaults and we are making adequate provisioning. Last quarter, we were 54 percent for the provision coverage ratio and the corporate book was 58 percent. So we will make adequate provisions during the coming quarters. So depending on the requirement, we would align with this."
“For MSME sector, our total book is something around Rs 2 lakh crore out of a total book size of Rs 21 lakh crore. So it is hardly 10 percent of our total loan book. Number for Mudra scheme, I don’t have it with me right now,” he said.
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