Nagpur: Non-performing asset (NPA) ridden Dena Bank, which is slated to be merged with Bank of Baroda and Vijaya Bank, hopes to recover Rs5,000 crore by March 2019.
The chairman-cum-managing director (CMD), Karnam Sekar, who was in the city to chair a branch managers’ meet, said NPAs are expected to come down considerably before the proposed merger. A marginal reduction is expected when the latest position will be released soon.
The bank’s total NPAs stand at Rs16,000 crore at present. “We hope to recover Rs5,000 crore by March end. This is on the higher side but still on a conservative estimate, the bank hopes to recover around Rs2,500 crore by the fiscal’s end,” said Sekar.
The bank is expecting rulings in some of the cases from the national company law tribunal (NCLT) with which a chunk of dues may be recovered. Apart from it, some of the loans would be sold off to the asset reconstruction companies (ARCs) and talks of a one-time settlement are also underway with a section of borrowers, said Sekar.
“The banking sector is expected to improve from the financial year 2019-20 though not much good news can be expected in the preceding quarters. The bank needs to take lessons from its past experience and there are plans to strengthen the risk appraisal system in the coming days,” he said.
The major defaulters are from the steel, infrastructure and the power sectors. These sectors failed to perform and were marred by time and cost overruns. “On the other hand, the banks estimated a smaller repayment cycle for these sectors which actually had a longer time line for revenue generation. The miscalculation led to defaults eventually,” said Sekar.
Appearing optimistic, he said things are improving in these sectors as well. For example, in the power sector, the plant load factor is slowly increasing and has touched 64% on an average. By 2019-20, the business may see better times.
However, the bank has also learnt after dealing in these sectors and the future strategy will be planned accordingly. A major investment is also planned in the technical upgradation which will also be a part of the credit appraisal system. “There are plans to have a centralized system for loan appraisal. For example, in case of retail sector, all the loans may be processed at a centralized unit which would have personnel having expertise in dealing in sector,” said Sekar.
