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.
