Central Bank of India has managed to recover in cash around Rs 660 crore of its bad loans in the first half of the current financial year. This is equivalent to the whole of last year’s recovery.
Speaking to Business Line , M.V. Tanksale, Chairman and Managing Director of the bank, said: “Our complete focus will be on NPA management. The target for the current financial year is Rs 1,300 crore, and I am sure we will achieve this.”
At present, the bank’s gross NPA stands at 5.4 per cent and net NPA, 3.8 per cent.
He attributed the high NPA to the short time (from September 2011 to March 2012) within which the bank had to complete the system-identified NPA exercise, when most of the competitors did it over three years. “As a result, , my book is being seen as slightly blown up. But we are confident that it is addressable, and we are all working towards that, he said.”
Restructured portfolio
The bank’s restructured loan portfolio is Rs 21,000 crore. Of this, Rs 12,000 crore relates to power distribution companies in Tamil Nadu, Rajasthan, Uttar Pradesh and Haryana. This is followed by aviation (particularly Air India), telecom infrastructure industry, real estate, and steel and textile industries. However, Tanksale said that of the restructured portfolio, Rs 3,000 crore worth loans have been performing well for over two years and, hence, will move these out of the restructured portfolio once the RBI guidelines on this is out. Besides, the RBI has also announced additional 0.75 percentage point provisioning for stressed assets. Currently, the provisioning is capped at 2 per cent.
“We are yet to get the guideline on this too. If that is required to be done, on my existing portfolio, it will work out to Rs 150 crore,” said Tanksale, adding that it will surely impact the bank’s net profit to that extent.
Additional capital
Central Bank of India requires Rs 2,000 crore additional tier I capital for the current year. “We have put in our request, and the Government has agreed to infuse the capital,” he said.
On the bank’s exposure to the Mallya-owned Kingfisher, he said, though it was reported that the UK-based Diageo Plc is to acquire stake in United Spirits Ltd for $2 billion, it has not happened yet. “It’s a process. The company is not yet cash-in, and there is no definite commitment from Mallya on this,” explained Tanksale.