Agriculture NPAs: SBI says it should do a better job at recovery

With agriculture emerging as the most stressed segment for the bank, State Bank chief financial officer Diwakar Gupta said the country's largest lender needs to do a "better job" of collecting its dues from the farm sector.

"I think we need to do a better job on collecting from the agriculture sector. May be some of it would come back if we were doing it more effectively," Gupta said.

In its quarterly earnings announced on Monday, the bank had said the gross non-performing assets ratio for agriculture during the December quarter stood at 9.45 percent as against an overall 4.61 percent. Along with agri lending aviation loans to Kingfisher, the bank's provisioning rose 87 percent in the quarter.

Agriculture accounts for 12 percent of the bank's book as of the December quarter.

Gupta did maintain that a lot of the problems in agriculture are structural like lack of right linkages and storage facilities among other things.

However, he also pointed out that there are "moral" issues at play with some borrowers showing reluctance to pay in spite of their ability to pay.

"A lot of anecdotal feedback we get from the ground is that there is a reluctance to pay, apart from inability to pay," he said.

It can be noted that after the massive farm loan waiver in 2003 by the Centre amounting to nearly Rs 60,000 crore, many banks have been reporting that farmers are not reluctant to pay up expecting periodic bailout by the government.

Gupta, however, did concede that from the recoveries perspective agricultural segment, with its small ticket sizes, is difficult for banks.

The SBI has nearly 53 lakh accounts and the average ticket size of a loan is Rs 62,000, he said.

"The short-term challenge for banks internally is to ensure that their systems and processes allow for adequate micro-tracking and follow-up on the smaller accounts on unsecured retail, on agriculture, on the small and micro in the SME segment," he said.