SBI chief slams ‘selfish’ pvt bank

Leh, Sept. 16: State Bank of India Chairman Rajnish Kumar has slammed a "selfish" private sector lender for the crisis at Altico Capital, as its unilateral move to secure its own money can potentially cause troubles to the wider financial system.

The realty-focused nonbanking lender Altico, which owes over Rs 4,500 crore to the system (mostly banks), defaulted on a nearly Rs 20 crore interest payment late last week on an external commercial borrowing (ECB) loan.

The default by Altico has resulted in concerns over the wider implications.

According to reports, a leading private sector bank allegedly moved in to secure its exposure by "netting-off" money from a fixed deposit maintained by Altico.

"If any bank makes a selfish move, it can have a negative impact on the rest of the system," State Bank of India (SBI) Chairman Rajnish Kumar told reporters here over the weekend.

"You have taken care of the Rs 50-100 crore (exposure), and felt happy for saving your money, but if you are damaging the system, then it is not proper," Kumar said, without naming the private sector lender. Rajnish Kumar

"Even in the case of the biggest of the companies, if a bank pulls the trigger or stops credit flow, the negative impact can come," he added.

The need is for bankers to mount coordinated efforts which help the entire financial system, he said, pointing out that the same is being used for biggest of the stressed cases.

The comments from the SBI chairman come days ahead of a bankers' meeting to find a solution.

Altico owes Rs 660 crore to the UAE-based Mashreq Bank, Rs 400 crore to SBI, and Rs 200 crore to UTI MF and Rs 150 crore to Reliance Nippon, as per India Ratings estimates.

Altico has defaulted on interest payment of Rs 19.97 crore to Mashreq Bank last week. —PTI