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RETAIL BANKING | Staff Reporter, India

Bad loan provisions are the biggest challenge for State Bank of India

This alarms the bank even as credit has grown from a three-decade low.

State Bank of India specifies non-performing loan provisions as the biggest challenge for growth, Bloomberg reports.

The bank's chairman Rajnish Kumar said in a Bloomberg interview, “Whatever process we resort to for the resolution of non-performing assets there will be a gap in the provisioning. That is precisely where the support from the government is required. For the banking system to come out of the problem we have to provide for those loan losses that have been incurred."

Even with credit growth reviving after three decades of drought, the worst non-performing loans have hindered the country's economic growth since 2014.

Currently, the government plans is pressured to pick the economy up before the 2019 elections, so it plans to put $33 billion of capital to struggling banks. According to Kumar, “Banks need to recapitalize, write down bad debts and be in a stronger position first. We need to create a few more large banks in the country as the gap between SBI and others is very wide."

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