Bad loans hurt SBI’s profit

Fiscal year 2014 won’t be good for SBI.

Analysts said an increase in bad loans and the provisions to guard against them are likely to eat into the profits of State Bank of India this financial year. State-run SBI is India's largest lender and creditor.

SBI and other Indian banks will have to contend with rising interest rates and a likely increase in bad corporate loans after the Reserve Bank of India, the central bank, introduced monetary tightening measures this quarter to prop up the rupee that fell to a record low against the U.S. dollar last week.

Analysts can't see why financial 2014 should get better for SBI considering huge asset quality pressures.

A number of loan defaults and lower net interest income in the three months ending June triggered the second consecutive drop in quarterly profit for SBI.