BoI expects to recover 2,500 crores of bad loans per quarter

Bank of India (BoI) has set an ambitious Rs 2,500 crore quarterly recovery target for the current fiscal year as the public sector bank looks to expand after years of stagnation. CEO AK Das said he expects the loan book to grow in double digit this year and hopes to keep slippages at an average of Rs 600 crore per quarter.

The public sector bank reported gross NPAs at 9.98% of loans as of March 2022, down from 10.46% in the quarter ended December. Das said he expects the bank's NPA to be below 8% in March 2023 due to a combination of improving bad loan recoveries and restrained fresh slippages.

"Our target is to recover Rs 2500 crore per quarter and allow only Rs 600 cr to slip so that we are in positive territory on NPAs. Until the third week of June, we have done Rs 1900 crore of recoveries so far in the first quarter," Das said.

However, a large part of the recoveries depend on the bank's cases in the National Company Law Tribunal (NCLT) in which Rs 32,000 crore out of 45,000 crore gross NPAs of the bank are awaiting progress. The bank will also sell Rs 2400 cr bad loans to the newly launched National Asset Reconstructuin Co Ltd (NARCL).

BoI is the lead lender to the debt laden Kishore Biyani promoted Future Group that owes lenders more than Rs 25,000 crore. In April it initiated insolvency proceedings against the Future group which is yet to be admitted by the National Company Law Tribunal (NCLT). Das said the bank recognised Rs 600 crore of slippages from the Future Group in the quarter ended June 2022 and has now fully provided for its exposure to the group.

Das said higher recoveries will compliment the bank's growth plans as it looks to expand its loan book with larger bets on the mid cap segment.

"This year our focus is more on mid cap segment where we can do much better. We are envisaging a 8% to 10% loan growth this fiscal which is at the system or just above. We expect to our net interest margin to be as close to 3% as possible and credit cost of max 1% because we have done a lot of proactive provisioning. Housing and retail will continue to to grow faster than the rest," Das said.

He expects corporate loans to grow this year after shrinking last year mainly due to demand from core sectors like steel and cement.

"I expect big bang growth in the construction sector which has forward and backward integrations with as many as 132 sectors which along with the government's push for infrastructure will create a multiplier effect." Das said.

Corporate demand has been muted for the bank as out of the Rs 65,000 cr sanctioned not even half has been utilised.

The bank's board has approved Rs 2500 crore of equity raising but with its capital adequacy at 17% currently, the call to raise more equity will only be taken at the end of September, Das said.

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RBI imposes penalties on BoI and Federal Bank

Reserve Bank of India (RBI) on Friday said it has imposed a penalty of Rs 5.72 crore on Federal Bank for deficiencies in regulatory compliance.

A  penalty of Rs 70 lakh has also been imposed on Bank of India for non-compliance with certain provisions of Know Your Customer (KYC) norms and instructions on 'compliance function in banks' issued by RBI, it said in a statement.

About Federal Bank, RBI said the bank failed to ensure that no incentive (cash or non-cash) was paid to its staff engaged in insurance broking/corporate agency services by the insurance company, according to a separate statement.

RBI had carried out Statutory Inspection for Supervisory Evaluation (lSE) of the bank with reference to its financial position as on March 31, 2020.

In another statement, RBI said a fine of Rs 7.6 lakh has been imposed on Dhani Loans and Services Limited, Gurugram for non-compliance with KYC norms.

RBI said the penalities are based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the two banks and Dhani Loans and Services with their customers.

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Six Indian banks sue GVK for Rs 12,114 crore: Report

Six Indian banks are reportedly suing the GVK Group for $1.5 billion or Rs 12,114 crore, according to the Times of India. The six banks include Bank of Baroda, Bank of India, Canara Bank , Icici Bank , Indian Overseas Bank, and Axis Bank.

According to the report, GVK defaulted on a $1-billion loan and a $35-million letter of credit facility given by banks in 2011, and a $160-million loan lent in 2014.

GVK Coal Developers (Singapore) and nine other GVK Group companies are being sued in the case which opens Monday.

As per the banks, GVK failed to make repayments as they fell due and failed to obtain a mining lease in the Alpha project in Queensland, Australia by December 31, 2012, which was a project milestone that had to be satisfied. The banks reportedly asked GVK in November 2020 to cancel the agreement and requested repayment. But neither GVK nor its guarantors has paid any of the sums owed, the banks claimed.

On the other hand, GVK argued that "the loans was to provide part funding for the acquisition of the Hancock companies in Australia to develop their assets — including the Alpha project — into working coal mines".

“The deterioration in the market for coal, the lack of third-party investment, legal challenges to the mining projects in the courts of Queensland, meant that very little progress was made to develop the mining assets,” GVK states. GVK states it could not obtain the mining lease owing to litigation by environmental groups but denies this was a “default”.

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Privatisation Of Bank: Two banks to be sold in the country, centre to speed up law change process

 

The Centre speed up the process of privatising two State-owned banks. News agency PTI quoted a source from the Centre as saying on Wednesday. The Modi government at the Centre had earlier amended the 'Banking Regulation Act' to pave the way for private investment in State-owned banks. According to sources, the Centre wants to pass a bill in this regard in the upcoming monsoon session of Parliament.

Union Finance Minister Nirmala Sitharaman had said last year that the Centre wants to start the process of privatising some state-owned banks. Therefore, the Bank Nationalization Acts of 1970 and 1980 will be amended and the Bank Control Act of 1949 will be amended. According to finance ministry sources, the process has begun. The government has also started preparing the draft of the 'Banking Regulation Act'. If all goes well, the amendment will be passed in the monsoon session. Of course, there is a good chance of the opposition being hindered. However, due to the majority, the government should not have any problem in passing this law.

The amendment has been passed in parliament and there will be no bar on the privatization of State-owned banks. Only then will the process of privatization of state-owned banks begin. Initially, two state-owned banks have also been listed for disinvestment. The name of which two banks will be privatised is yet to be announced by the Centre. According to sources, the Modi government initially chose four medium-sized banks for privatisation. The four banks that were placed in the initial list for privatisation are Bank of Maharashtra (BoM), Bank of India (BoI), Indian Overseas Bank(IOB) and Central Bank of India. Later, niti aayog proposed that most of the shares of Indian Overseas Bank and Central Bank of India be sold. The Modi government can go ahead with the NITI Aayog's proposal.

This is not the end of it, the government also wants to complete the privatization process of the tate-owned company BPCL quickly. Sources claim that only 52.3 per cent stake in BPCL held by the Centre will be sold. Earlier, the Modi government had taken the initiative to sell the shares of BPCL. Initially three companies showed interest in buying bpcl shares. But in the end, only one company survives in the race, the sources claim.

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Bank of India(BoI) Q4 net profit rises 142.3%

Public sector lender Bank of India’s (BOI) net profit rose by 142.3 per cent to Rs 606 crore in Q4FY22, on improvement in net interest margins

It posted a net profit of Rs 250 crore in Q4FY21, the bank said in a statement.

For FY22, the net profit rose by 57.6 per cent to Rs 3,405 crore from Rs 2,160 crore in FY21.

The board recommended a dividend of Rs 2 per equity share (of face value of Rs 10) for 2021-22 subject to shareholders' nod. The bank's share was trading 2.48 per cent higher at Rs 47.6 per cent on BSE.

The Mumbai-based lender’s net interest income (NII) expanded by 35.77 per cent to Rs 3,986 crore in Q4FY22 from Rs 2,936 crore in Q4FY21. The net interest margin (NIM) improved to 2.58 per cent for Q4FY22 as against 2.01 per cent for Q4FY21.

Non-interest income declined from Rs 1,829 crore in Q4FY21 to Rs 1,587 crore in Q4FY22.

Advances increased by 11.35 per cent YoY to Rs 4.57 trillion as of March 2022. The retail, agriculture and MSME (RAM) loan portfolio increased 15.7 per cent YoY to Rs 2.16 trillion as of March 2022, BOI added.

The deposits rose by 0.12 per cent to Rs 6.27 trillion in March 2022. The share of low cost deposits – Current Account and Savings Account (CASA) – in domestic deposits stood at 45.02 per cent as at March 31, 2022, up from 41.27 per cent in March 2021.

The asset quality profile improved with Gross Non-Performing Assets (NPAs) declining to 9.98 per cent as at March 31, 2022 from 13.77 per cent in March 202. Its Net NPA stood at 2.34 per cent at end of March 2022 down from 3.35 per cent a year ago.

The provision coverage ratio (PCR) for bad loans improved to 87.76 per cent in March 2022 from 86.24 per cent a year ago.

The capital adequacy ratio of the Bank, as per Basel III, was 17.04 per cent as at March 31, 2022, up from 14.93 per cent a year ago.

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Bank of India Q2 profit almost doubles as asset quality improves

 

Public sector lender Bank of India on November 2 has reported profit at Rs 1,051 crore for the quarter ended September 2021, almost double from Rs 525.8 crore in the year-ago period, on falling slippages and decline in provisions.

Its net interest income, the difference between the interest earned from lending activities and the interest paid to depositors, fell 14.3 percent year-on-year to Rs 3,523.5 crore in September 2021 quarter, with a 2.7 percent YoY increase in gross advances and 0.89 percent rise in deposits. Net interest margin at 2.42 percent improved by 26 basis points (bps) sequentially but dropped 24 bps YoY. One basis point is a hundredth of a percentage point.

Advances increased to Rs 4.18 lakh crore in September 2021 quarter, from Rs 4.07 lakh crore in same the quarter last year, while deposits jumped to Rs 6.12 lakh crore from Rs 6.07 lakh crore in the same period," the bank told the BSE.

Asset quality improved with the gross non-performing assets (NPAs) as a percentage of gross advances falling 151 bps sequentially to 12 percent and net NPA declining 56 bps QoQ to 2.79 percent in the quarter ended September 2021.

Slippages dropped significantly to Rs 1,307 crore as of September 2021, compared to Rs 3,942 crore in June 2021 quarter, which as a percentage of standard advances was at 0.36 percent against 1.09 percent respectively, said the bank, adding credit cost declined further to 0.26 percent in Q2FY22, from 0.95 percent in Q1FY22.

The bank reported a sharp fall in provisions and contingencies for the quarter at Rs 894 crore, declining 46 percent from Rs 1,652 crore in Q1FY22 and falling 56.3 percent from Rs 2,045 crore in Q2FY21.

Provisions refer to the amount banks need to set aside to cover the losses from a loan account. When an account turns into an NPA, the provisions required will equal the full loan amount.​
Bank of India said non-interest income increased by 58.71 percent YoY to Rs 2,136 crore for the September 2021 quarter. However, pre-provision operating profit at Rs 2,678 crore fell by 5.4 percent YoY.

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Bank of India(BoI) opens first-ever branch in Ladakh

 

Bank of India on Friday extended its operations to the Union Territory of Ladakh by opening its first-ever branch here with its top official asserting that the bank is fully committed to extending.

 its banking services to the people living in far-flung areas of the country. This was the 5,086th branch opened by a bank in the country and abroad, and is fully computerised and digitised with a facility of E-Gallery to provide 24x7 banking to the residents of Leh, a spokesperson of the Bank of India (BOI) said.

He said BOI Managing Director and Chief Executive Officer A K Das opened the branch in the presence of Field General Manager A K Jain, Zonal Manager Vasudev, Branch Manager Sangeeta and various local dignitaries and customers.

"The bank is fully committed to extending its banking services to the people living in the far-flung areas of the country. The opening of a branch here is an important step towards this goal," Das said.

He said it would not only boost economic activities in the region but will also help the local people to use various banking products like housing, vehicle, education and agriculture loans, and also reap the benefits of other government schemes.

Das added that the bank has a unique salary account scheme for defence and paramilitary personnel providing free insurance cover.

"The bank also provides home, vehicle and consumer loans at low rates. Recently, the bank has reduced the interest rate for housing loans to 6.50 per cent and that for vehicle loans to 6.85 per cent," he said.

Das added that the bank will continue to endeavour to provide the best-quality banking facilities to its customers and connect more and more people to mainstream banking with fully digitised facilities.

Meanwhile, in continuation to the bank's mission to reach maximum customers across India, it also conducted a 'customer outreach programme' at Leh branch, wherein Das distributed loan sanction letters to various beneficiaries, the spokesperson said.

Under the bank's corporate social responsibility, he said Das is presenting 'paper cutting machine' to a non-governmental organisation of Ladakh, People's Action Group for Inclusion and Right, who is assisting differently-abled persons by empowering them with various skills to earn their livelihood and live a respectable life.

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This company picks up 4% stake in Bank of India via open market transaction

 

State-owned Bank of India on Friday said LIC has picked up nearly 4 per cent equity shares of the bank through an open market transaction a day earlier.

LIC has picked up nearly 3.9 per cent (15,90,07,791 shares) of the bank through open market acquisition on September 2, 2021, Bank of India said in a regulatory filing.

Before the latest acquisition of shares in the bank, LIC held over a 3.17 per cent stake in the state-owned bank. The bank said that LIC's stake in Bank of India has now increased to 7.05 per cent, equivalent to 28,92,87,324 shares

As per Sebi regulations on substantial acquisition of shares and takeovers, companies have to inform the stock exchanges when an entity holds more than 5 per cent shares in a listed company.

Last week, the bank closed its QIP in which it raised Rs 2,550 crore by allotting preference shares to qualified institutional buyers (QIBs).

In the qualified institutional placement (QIP), which closed on August 30, LIC picked up the biggest chunk by acquiring nearly 39.22 per cent (15,90,07,791 shares) of the equity shares offered in the issue. Through this QIP, the government shareholding in the bank came down to 82.50 per cent from 90.34 per cent earlier.

Apart from using the equity capital to fund business growth, the bank also has to bring down the government's shareholding in the bank. Thus, it is aiming to reduce the government holding by selling the equity.

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