Andhra Bank is looking to bring down its gross non-performing assets (NPAs) to below 5 per cent by end-September and to around 4 per cent by the end of the current financial year.

“We have already seen the worst. There will be no surprises now and things have already begun to improve for us,” its Managing Director and Chief Executive Officer SK Kalra told Business Line here.

In the fourth quarter of the financial year ended March 31, 2015, gross NPAs stood at 5.31 per cent. But for three quarters prior to this, it was 5.99 per cent. “Our plan is to bring down net NPAs to 2 per cent by March 2016,” the Kalra said.

Recovery plan

A robust recovery plan with active participation from bank employees has already been put in place. All branches have been directed that no additions to NPAs will be tolerated and there should be only net reductions.

“As part of a strategy, we will not shy away from declaring an asset as an NPA. Immediate classification as a bad loan will speed up recovery efforts,” Kalra said. The recovery efforts in some big-ticket loans for which Sarfaesi has been invoked will also bear fruit in the coming quarters.

More important, the bank sees relief from the adverse impact of the agricultural loan waiver scheme in Andhra Pradesh. “We have no issues with the Telangana Government and pressure in Andhra Pradesh is also easing out. This will make a big difference to the quality of our loan book,” he added.

Capital-raising

The bank is awaiting favourable market conditions to raise about ₹1,000-crore capital. The capital-to-risk-weighted assets ratio (CRAR) was at 10.63 per cent. It has headroom to raise both tier I and tier II capital. The plan is to keep CRAR at over 11 per cent.

“We are also expecting some capital from the government as Andhra Bank has recently been recognised as one of the nine efficient public sector banks in the country,” Kalra said.

Pan-India focus

On the business front, the bank will continue to expand its pan-India presence by opening a ‘substantial’ number of the 500 new branches proposed this year outside Andhra Pradesh and Telangana. It recently added four new zones to its network at Hubli, Sambalpur, Meerut and Srikakulam, taking the total number of zones to 36.

“We are not too keen on corporate advances but will step up focus on retail, micro, small and medium enterprises,” Kalra said.

Compared to the gloom that prevailed at the bank in December last year, when high NPAs had triggered merger risk for the bank, the mood has turned upbeat now. But it remains to be seen if this can be sustained in the year ahead.

The Andhra Bank’s scrip gained 2.35 per cent on the BSE on Wednesday to close at ₹78.30.

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