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.

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Bank of Baroda starts 'aggressive action' to recover bad loans of large amount

State-owned lender Bank of Baroda has set up a team of lawyers, called the ‘War Room Team’, to deal with bad loans whose recovery is now embroiled in legal complications, reports The Economic Times.

BoB has 380 high-value bad loan accounts, in which the bank is either the sole lender or the consortium leader. The total outstanding amount of these loans is about Rs 15,000 crore.

The bank witnessed a net loss of Rs 3,102 crore in the January-March quarter of 2018. In the same period last year, it had made a net profit of Rs 154 crore.

Following this, the bank has taken up several “aggressive” actions for recovery to bring back the bank’s profit. “We have started directly monitoring the progress of enforcement action in those high-value accounts,” Venugopal Narayanan, head (legal), Bank of Baroda, told the publication.

The lender has also created a stressed asset management vertical, under which 15 existing stressed asset-recovery branches and another 32 newly-created regional stressed asset recovery branches are working.

The bank has arranged for special grooming of officers on various modes of recovery before they are posted to the stressed assets branches to yield better results.

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PNB expects to recover large amount from NPAs in Q1FY19

Enthused by the successful resolution of Bhushan Steel, Nirav Modi fraud-hit Punjab National Bank (PNB) is hopeful of Rs 8,000 crore recovery from bad loans in the first quarter of the current fiscal.

The bank, with its focus on recovery of dues from defaulters, has managed to surpass the total amount recovered in the last fiscal in the first two months of this financial year, a senior PNB official told PTI.

"This is due to renewed focus on recovery by PSB banks including referral of many cases to NCLT under the bankruptcy code is forcing many of the defaulting companies to settle their NPAs. While PNB had recovered Rs 5617.55 crore in the whole of last year, the bank's recovery stands at Rs 6,000 crore by first week of June," the official said.

By the time, this quarter (April-June) ends, PNB expects to complete recovery of almost Rs 8,000 crore, the official said, adding that large corporates like Religare, Arcotech and Surya Alloys have recently settled bad loans worth Rs 350 crore in the last two months via the recovery camps setup by PNB.

It is to be noted that PNB posted loss of Rs 13,416.91 crore for the fourth quarter ended March, 2018, the biggest ever by any domestic lender.

The bank last month said it provided for Rs 7,178 crore, 50 percent of the total amount of Rs 14,356 crore in the fourth quarter of 2017-18, with regards to the loss incurred on account of Nirav Modi fraud. According to the bank, the remaining amount will be covered in the three quarters of the current fiscal year.

PNB further said it has paid Rs 6,586.11 crore to other banks to discharge its liabilities towards Letter of Undertakings (LoUs) and Foreign Letter of Credits (FLCs) issued fraudulently and in unauthorised manner to certain overseas branches of Indian banks through the misuse of SWIFT system of the bank, which was then not integrated with CBS (core banking solutions).

Modi and his associates in connivance with some officials of PNB defrauded the bank of over USD 2 billion dollar. To focus on recovery, PNB has moved over 3,000 personnel from operations across the country into the stressed assets vertical, the official said.

"The stressed assets vertical has started operating from June 1. Four General Managers from the Corporate office have been tasked with heading the recovery vertical as part of the bank's management strategy to fast track recovery of NPAs," the official said.

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