Attributing the deterioration in the asset quality to the general downturn in the economy, SBI chairman MS Verma said the bank will keep a constant vigil to maintain the quality of assets. ``I believe with the kind of recoveries being made and the write-offs on the anvil, NPAs might increase only marginally,'' Verma said.

SBI deputy managing director and chief financial officer PK Bhattacharya said the gross NPA levels had fallen below the 15 per cent mark in the first half. "We cannot disclose it now, but it is little less than 15 per cent," Bhattacharya said. SBI's gross NPA level was 15.6 per cent on March 31, 1998.

Verma noted there has been a fall in the number of top credit-worthy companies of the bank during the past two years. ``There has been a fall of 1-2 per cent in the number of companies which were enjoyingthe top credit rating of the bank,'' he said, adding the bank has a seven-slab rating system for assessing the risk of corporates.

The bank keeps changing the companies' ratings on the basis of their credit-worthiness. Verma added the bank will keep a watch over all segments and sub-segments to prevent any undue occurrence of NPAs.

Verma said despite a slowdown in the economy, the bank would not revise downward its assets growth target of 16 per cent in view of the expected disbursement to infrastructure projects, the signs of rejuvenation in certain industrial sectors and enhanced focus on trade, housing loans and consumer finance in the personal segment.

"In fact, sanctions made by the executive committee (EC) have grown by Rs 9,000 crore in the period between April 2 and October 23 against Rs 6,000 crore in the corresponding period of the previous year," Verma said. These sanctions include both fund as well as non-fund activities.

Out of the total provisioning of Rs 816.32 crore for April-September1998 (Rs 658 crore in the corresponding period of last year), Rs 335 crore was provided for bad debts and Rs 137.44 crore for investment depreciation.

Bhattacharya said the bank has not been able to provide for the impending wage revision that is likely to take place. "We have not yet got a sense of direction where we are heading. So we have not been able to provide anything on this front," Bhattacharya said. He added the bank will provide 0.25 per cent on standard assets at the end of the year.

He said yield on advances had come down to 11.76 per cent from 12.15 per cent in the current financial year. "Yet interest earned on income has gone up because volumes have risen," he said.

Bank has Rs 100cr exposure in US-64

The State Bank of India has a paltry Rs 100-crore exposure in the Unit-64 scheme of the Unit Trust of India.

SBI chairman MS Verma said US-64 was one of the liquid instruments available in the market and the bank uses this as a liquidity-management instrument rather than aninvestment avenue.

"Among all the instruments in the money market, US-64 is the most liquid. We will put in money as and when we think it fits into our liquidity management,'' Verma said.

He added the bank's secondary market exposure was to the tune of Rs 1,500 crore and will consider to buy more if there is opportunity. "It all depends on the returns," he said.

Verma said the bank is prepared to underwrite the centre's forthcoming disinvestment programme.

``The bank is prepared to underwrite each issue in case the centre decides to go for a public issue for each company,'' he said.