SBI projects 16 per cent loan growth in FY14

State Bank of India (SBI) expects to register a lower loan growth rate of 16 per cent for the current fiscal as the demand for advances from the industrial sector is "weak", the country's largest lender said on Thursday.

"...we would like to believe that the loan growth should not be above 16 per cent and deposits growth between 14 and 16 per cent (in 2013-14)," SBI chairman Pratip Chaudhuri told reporters when asked about his projections for the ongoing fiscal year.

"...we feel the loan environment is rather weak and hardly any demand in the industrial sector so whatever loan demand is coming is from consumer sector," he said.

He also attributed the expectation of lower growth in advances to the increasing demand from corporate sector opting for dollar loans.

"Dollar loans are becoming cheap. Many of the corporates who are thinking of long-term loans for their projects are increasingly preferring dollar loans. Dollar loan pricing is going down every year but rupee loan pricing is not going down. Demand for rupee loan from corporate sector is weak. Therefore, we are pegging (loan growth) at 16 per cent," he further said.

SBI had posted a 21 per cent increase in advances and a 15 per cent growth in deposits last fiscal year.

The bank would announce its financial results on May 22, Mr Chaudhuri said.

Upbeat over the growing demand from housing sector, SBI chairman said the bank was aiming for 25-30 per cent growth in housing loans at Rs 30,000-35,000 crore in current fiscal year.

He said about 25 per cent of bank's total housing loans are 'takeover loans' which are also boosting growth in outlay for housing and the NPA (non-performing asset) level in this sector was less than one per cent.

Noting that NPAs were the bank's biggest challenge at this juncture, he said that default in loan repayment was found mostly in SME, mid corporate and agriculture sectors because of "difficult" market conditions.

He also said that textile sector, some steel companies and those which supply products to electricity boards and contractors were facing liquidity and profitability problems.

Mr Chaudhuri said the gross NPA could be 4.5 per cent and net NPA 2 per cent.

Asked about the liquidity problem, SBI Chairman said the bank was not facing any liquidity crunch. "Liquidity crunch is not for us, we have an excess of liquidity... as of today we have Rs 40,000 crore of excess liquidity," he said.