Public sector lender Punjab National Bank plans to offload non-performing assets (NPAs) aggregating Rs 548 crore to trim portfolio of bad loans and improve financial profile.
The Delhi-based bank plans to sell its 54 NPAs (accounts) located in Ahmedabad, Chennai, Delhi, Jodhpur, Kolkata, Kozikode, Meerut, Mumbai and Nagpur.
“We want to realise value by selling these NPAs and wish to bring down gross NPA’s to 1 per cent by the end of March 2010”, senior PNB official said.
While NPAs would be sold to asset securitization and reconstruction companies on cash, securities receipts and bonds, banks, financial institutions can pick up assets on cash basis only.
Many of borrowers whose NPAs are being sold, have also taken loans from other banks so ARCs will be interested to buy out these assets and aggregate them. It may help them in account reworking and improve prospects for realization, official said.
PNB’s gross NPAs declined to 1.80 per cent at end of June 2009 from 2.82 per cent a year ago.
In absolute terms, gross bad assets declined to Rs 2,864.67 crore at end of June 2009 from Rs 3,264.74 crore a year ago. It made provision of Rs 268 crore including floating provision in the first quarter of 2009-10 as against Rs 48 crore a year ago.
According to the RBI data, gross NPAs of scheduled commercial banks in percentage terms remained virtually unchanged during 2008-09. They stood at 2.4 per cent at end of March 2009.
There has, however, been a significant rise in this ratio for foreign banks and new private sector banks, particularly after September 2008, reflecting deterioration in the asset quality of these bank groups following the global financial meltdown.
Both gross and net NPAs increased in absolute terms for banking sector in 2008-09. This was despite extension of certain relaxations permitted to banks to restructure certain advances.
Hence, banks need to exercise better risk management and vigil to avoid future slippage in asset quality, RBI said.