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“If 50 per cent of the cases is resolved by the NCLT, it can bring down our NPAs by Rs 40 billion in the next three to four quarters. Most of the cases under NCLT are national assets. The demand for steel is growing and so is the EBITDA (earnings before interest, taxes, depreciation and amortisation). Also, with steel prices remaining firm, we hope that these national assets will grow and the cases will get resolved” said R Subramaniakumar, managing director & chief executive officer, IOB.
He said the bank’s NPAs have consistently come down over the last three quarters. As on December 31 last year, IOB had a gross NPA of 21.95 per cent and net NPA of 13.08 per cent. “Our recovery rate has been higher than the slippage rate and the same trend will continue. In the third quarter (October-December), we had a slippage of Rs 14.91 billion but our recovery was Rs 32 billion”, he added.
IOB’s current focus was on rebalancing its balance sheet and reducing exposure to high risk corporate accounts. The share of the corporate lending to the bank’s total advances has slowed from 58 per cent to 46 per cent. The public sector lender whose Q3 net loss widened to Rs 9.71 billion on account of higher provisioning, aims to turn profitable in 2018-19.
The bank is now focusing on stepping up credit to sectors like agriculture, retail and MSMEs (micro, small & medium enterprises).
“Our priority sector lending is 48 per cent while credit to the agriculture sector is 21 per cent of the total advances, both higher than the mandated figure. IOB’s housing loans have registered a growth of 32 per cent. We have completely digitalised our operations in the housing loans portfolio”, said Subramaniakumar.
He said, IOB had no exposure to the Nirav Modi fraud case relating to the Punjab National Bank (PNB) but had taken adequate safeguard measures to prevent such cases. “Our forex operations have been centralised. This has brought about a lot of standardisation in our set up. Moreover, our inward and outward remittances have been integrated with our CBS (core banking solutions)”, he informed.
The bank is going for an overhaul of its ATM operations where 1400 existing ATMs would be replaced with new ATMs that would double up as cash deposit machines. All the new ATMs are expected to be deployed before March end this year. With a network of over 3300 branches, IOB has a total business of Rs 3.68 trillion.