State Bank of India is reported to be planning to hive off its stressed-loan portfolio into a separate company. The proposal may help the bank to concentrate on core banking services. There are also reports that sovereign wealth funds and private equity players have shown interest in acquiring the stake in the proposed entity. The proposed company may house some Rs 1.37 lakh crore of NPAs – 9% of advances of the bank. It is also reported that the bank has put Rs 31,000 crore of loans on a watch list, implying that these are currently categorised as standard but could go bad. The move may help the bank to clean up its books and start afresh on a clean slate.
