Kolkata, May 27 (IANS) State Bank of India's capital or non-performing assets will not be impacted in a big way if the proposed merger of its five associate banks and the Bharatiya Mahila Bank with it happens, chairperson Arundhati Bhattacharya said on Friday.
"I can assure you that the merger will not have any big impact either on capital or on the non-performing assets (NPAs) of the bank. We are well positioned for the merger to take place.
"There will be challenges. But we see that there will be benefits from it," she said.
The bank sought "in principle sanction" of the central government to enter into negotiation with the subsidiary banks - State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore - and Bharatiya Mahila Bank Limited to acquire their businesses including assets and liabilities.
"The cost of merger on pension account would be around Rs.3,000 crore. But net-net we think the cost of merger will not be overwhelming," she said.
The largest bank of India will negotiate with its associate banks before floating a scheme of merger to the government and to the regulator.
The bank's quarter results was hit by higher provisions to cover bad loans. "In the fourth quarter out of Rs. 30,000 crore slippages, only Rs. 9,000 crore was due to AQR (Asset Quality Review) the bank had taken up," she said.
Bhattacharya said the bank kept floating provision of about Rs.3,300 crore that could be used to cover special watch accounts.
Efforts are being done internally for the recovery. "We have stressed asset management group and they are working very hard. This quarter sales of bad loans to asset reconstruction companies (ARCs) were insignificant, but going ahead we are hopeful of doing greater transaction with them," she said.
The lender is close to form an external committee to monitor SDR (strategic debt restructuring) scheme. "SDR route is not working, but we are trying to address this issue," she said.
The bank looks at a loan growth at around 13-17 percent in FY17, she said.
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