Bank of India(BoI) aims to recover large amount in FY19, after gross NPAs declined in Q1

State-owned Bank of India aims to recover about Rs 17,000 crore from all sources in the current financial year ending March 2019. After reporting a turnaround in net profit at Rs 95 crore for the first quarter ending June 2018, the lender's chief said it has identified Rs 8,000 crore worth of assets to be sold to asset reconstruction companies (ARCs).

Total recovery during April to June quarter stood lower at Rs 2,699 crore as against a whopping Rs 11,417 crore in the March quarter. “The recovery journey will continue in Q2 (July-September quarter) also at about Rs 4,000-5,000 crore... Recovery from all sources will be Rs 17,000 crore in FY2019," said Dinabandhu Mohapatra, MD and CEO, Bank of India.

He said the bank's target is that recovery and upgradation should be more than slippages so that
net slippage will be minimum.

Recovery from Project 'Sashakt'

Bank of India has also identified 7-8 accounts, with an exposure aggregating Rs 2,000-3,000 crore, to be shifted to the proposed AMC, envisaged for resolution by the Sunil Mehta-led panel under Project Sashakt.

The high-level committee on restructuring stressed assets and creating more value for public sector banks, which was headed by Sunil Mehta, Non-Executive Chairman, Punjab National Bank, recommended that for loans above Rs 500 crore, an independent AMC should be set up.

“We have already discussed some of the accounts under the project…We will be doing it (shifting accounts) before August-end. Already, the preparation is on..."

"But again, it depends on (the provision level, the asset quality and valuations) negotiation and discussion," the Bank of India chief added. Additionally, some accounts to the tune of Rs 2,700 - 2,800 crore  are being considered to be resolved under the one-time-settlement (OTS) scheme under "mission Samadhaan" for smaller accounts. Mohapatra said, "We have got good demand for OTS from several borrowers given the restriction the case goes to NCLT."

Slippages and NPAs

Slippages into non-performing loans also reduced to Rs 6,671 crore during the quarter from Rs 12,973 crore in the previous quarter. Further, the bank is "quite hopeful that around Rs 500 crore will be realised during Q2 (through monetisation of non-core assets). Let us see how it happens. We have some real estate, some shares," the bank's chief said.

Although the gross non-performing assets (NPAs) declined by Rs 1,724 crore to Rs 60,604 crore as on June-end 2018, the gross NPA ratio nudged up to 16.66 percent of gross advances against 16.58 percent in the preceding quarter.

Consolidation and Branch rationalisation

Mohapatra stated that the bank is emphasizing on consolidation and profitability and thereby reducing low-yielding assets as well as rebalancing its portfolio to pump up RAM — Retail, Agriculture and MSME (micro, small and medium enterprises).

In a bid to rationalise business, it has closed down almost 294 ATMs and will further close 260 ATMs across the country.

Bank of India has reduced its total ATMs to 7,423 from 7,717 a year ago, while branch network remained steady at 5,127.

"We also identified 40 loss-making branches over three years even as about 28-30 branches have improved productivity. But we will take a final call by September," Mohapatra said.

The bank is also planning to close about 9-10 overseas business units over the next 6-7 months with two offices already closed. Within a quarter or two, Mohapatra hopes to continue the momentum to say NPA cycle is over.