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Mr K. Cherian Varghese, CMD, Corporation Bank, Mr V. Leeladhar, CMD, Union Bank of India, Dr Dalbir Singh, Chairman, Indian Institute of Bankers Platinum Jubilee Steering Committee, Mr P. S. Shenoy, CMD, Bank of Baroda, Mr R.V. Shastri, CMD, Canara Bank, Mr A.G. Joshi, CMD, Dena Bank and Mr B.D. Narang, CMD, Oriental Bank of Commerce, at the International Banking Summit 2002 in New Delhi on Monday.

NEW DELHI, Dec. 2

WITH the Parliament passing the Securitisation Bill, the banking industry is looking at bringing down the non-performing assets (NPAs) from the existing 7-8 per cent to 5 per cent.

Speaking at the sidelines of the `International Banking Summit', Dr Dalbir Singh, Chairman, Indian Banks Association said, ``Net NPAs in the banking industry has been increasing by Rs 5,000-6,000 crore every year. After the Securitisation Bill, we hope that NPAs of the banking industry will come down by 20 per cent or by Rs 6,000 crore this fiscal.''

Mr V. Leeladhar, Chairman, Union Bank of India and President of the Indian Institute of Bankers', said the industry was targeting to reduce net NPAs to 5 per cent this fiscal mainly through stringent action against wilful defaulters.

Banks have already started issuing notices to wilful defaulters. UBI has issued notices to 800 defaulters, Corporation Bank has sent out notices to some 43 defaulters, while Central Bank of India has sent out about 150 notices to defaulters in the Delhi zone alone. ICICI Bank is aiming at recovering Rs 1,600 crore from 16 defaulters to whom notices have already been sent.

Mr K. Cherian Verghese, Chairman and Managing Director, Corporation Bank said that the notices have at least brought several of the defaulters to the negotiating table. "Many of the defaulters are coming forward to settle their NPAs. Our banks have issued notices to 800 defaulters, of which 100 have approached for settlement through compromise,'' Mr Leeladhar added. Mr H.N. Sinor, Joint Managing Director, ICICI Bank said, the bank would rather go for bigger defaulters as ``we do not want to go after small defaulters.''

On the manpower front, some banks are also contemplating a second round of voluntary retirement scheme (VRS). Dr Dalbir Singh, who is also the Chairman of Central Bank of India, pointed out that human resource management was also being taken up by some of the banks after the first tranche of VRS was completed in 2000-01 that trimmed over one lakh excess staff.

``Some PSU banks are thinking of a second round of VRS. The government is to take a view on this,'' he said. Banks such as Bank of India and Punjab National Bank feel that once their technology upgradation is completed, they would be left with excess staff, which they want to prune through a second round of VRS.

The excess staffs after technology upgradation are to be deployed in other areas such as marketing.

The banking industry feels that it could become a force to reckon with. Once the balance sheets are cleaned by reducing the bad loans, operations are streamlined and PSU banks grow through mergers and acquisitions, they could consolidate their position in the global market.

``Most of the PSU banks have a capital adequacy ratio of over 11 per cent right now as against the international practice of 13 per cent. But, I am sure Indian banks can increase their CAR with higher profits. After two-three years, PSU banks should think of consolidations to reap the benefits of economies of scale,'' Mr Leeladhar added.

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