Mumbai: India’s largest lender, State Bank of India (SBI) has not stopped lending to non-banking financial companies (NBFCs), but does so after considering the risk perception of the borrower, said Arijit Basu, managing director, SBI.

“SBI is already lending to NBFCs and we continue to do so. Our decisions are taken based on risk perception that we have on a particular entity," said Basu on the sidelines of IMC’s Banking and Finance Conference.

Basu added while NBFCs face difficulties, these are not extremely grave. “There are one or two entities that are more severely affected and they need to address it. Both the RBI and the government have taken a few steps, and are contemplating taking some more. We will have to wait and see," he said.

As of 31 March, SBI’s NBFC exposure stood at ₹1.87 trillion, of which housing finance companies (HFCs) comprised ₹62,511 crore, central and state government-backed NBFCs ₹63,033 crore and those backed by large private sector institutions ₹67,226 crore.

On 6 June, SBI said that it had been closely monitoring its exposures in the NBFC sector for the past 10 months and taking appropriate action. It added that the overall quality of the NBFC asset portfolio in its books continues to be good.

“Challenges faced by accounts like DHFL have already been factored in when we have given our estimate for the stress that the bank would have to deal with in FY20, and included in our estimates for slippage and loan loss provisioning for the current financial year," it said.

Basu said the Reserve Bank of India’s 7 June circular on stressed assets is just a guidance and that SBI would like to resolve these cases as soon as possible.

“That process never stopped. For us it is never a challenge because it strengthens our hand," he said, adding that timelines prescribed by the Reserve Bank of India should never be a challenge for banks.

“The intent of RBI is to say that you act fast, and having learnt their lessons, banks are doing that."

Basu said banks have learnt lessons from the difficulties of the last 5-10 years and that they need to address those and continue to step up.

“The government is doing a lot. It has come up with an environment which is more meaningful. You have various mechanisms such as the Insolvency and Bankruptcy Code (IBC) which are falling into place."

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