The Hindu Business Line : Indian Bank set to get Rs 770-cr recap fund

INDIAN Bank is set to soon get a pat on the back from the Government by way of release of the second tranche of recapitalisation. In view of the strides made by the bank, as shown by its results for the first six months of the current fiscal, the Government feels that there should be no hitch in the release of the pending Rs 770-crore recapitalisation assistance.

Earlier this year, the Government had released the first tranche of Rs 1,300-crore recapitalisation assistance along with the condition that it would release the remaining Rs 770 crore of the support package only if it met the financial and physical targets set by the Reserve Bank of India and the Government.

"We are quite satisfied with the measures undertaken by Indian Bank and the improvement it has shown in its performance during the past two quarters of this fiscal. As of now we do not see any problem in the release of the second tranche of recapitalisation," a senior official of the Ministry of Finance said. However, he did not want to indicate as to when the fresh capital would be infused into the bank.

With the infusion, the capital adequacy ratio of Indian Bank should climb up close to the 9 per cent minimum stipulated by RBI. As on March 31, 2002, Indian Bank had recorded a CAR of 1.7 per cent on March 31, 2002, after several years of its being in the negative zone.

The bank has also reported a net profit of Rs 72 crore for the first six months of the current fiscal, against a net loss of Rs 23 crore during the same period the previous year. The operating profit during the period rose 393 per cent to stand at Rs 199 crore during April-September 2002. Indian Bank has claimed that in the process of recording the improved figures it has exceeded most of the financial parameters set by RBI and the Government while releasing the first round of recapitalisation of Rs 1300 crore.

Indian Bank had in fact turned the corner during the fiscal itself with net profit of Rs 33 crore for the whole year against net loss of Rs 273 crore in the previous fiscal.

On another front, the initiatives on recovery taken by the bank had resulted in a recovery of close to Rs 100 crore during the six months, thereby pruning the net non-performing assets (NPAs) to 7.84 per cent of net advances at the end of September 30, 2002, against 8.28 per cent at the close of the previous fiscal.

Indian Bank is the last of the `weak' banks still under the nursing programme of the Government and RBI. The two other banks that had kept company with it till very recently - UCO Bank and United Bank of India - have already been certified by the Government to have returned to the pink of health.

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