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SBI expects majority of stress to come from SME book

SBI, state bank of India

State Bank of India (SBI) estimates that around ₹20,000 crore worth of loans will turn bad over the next half of the year on account of COVID-19 related stress. While the bank expects the majority of slippages to come from the small-medium-enterprise sector, it upgraded  ₹5,965 crore of stressed accounts in October 2020, indicating an improvement in economic activity and credit profiles of borrowers. The majority of slippages during the quarter, around ₹2,756 crore, took place in the agriculture and SME loan book, said Dinesh Kumar Khara, chairman, SBI during a press conference on Wednesday. "For SMEs, activity levels for the first four months was quite low. But the emergence of demand is helping them to come back and though we had slippages of ₹6,000 crore we were able to pull back around ₹3,000 crore. This year has been unusual as there is no trend getting established on a monthly basis. We will get to see a better picture every month," he said. Slippages in the agriculture sector took place due to poor outreach to borrowers, although that has improved in the last two to three months, Khara added. Economic activity revival seems to back on a faster pace during the July to September quarter, as most companies say that their activity levels are back to 70-80% of pre-COVID levels, the bank said in it's investor presentation. Retail credit growth has also come bounced back to pre-COVID levels and loan disbursements are significantly higher in September 2020 compared to the…

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