Bank of India looks to raise Rs 500 cr more from asset sale this year

In June, it raised Rs 540 cr by selling 18% stake in life insurance joint venture with Dai-ichi and Union Bank of India to the Japanese firm

To increase capital base, state-run Bank of India has raised Rs 540 crore through monetisation of its non-core assets so far in 2016-17 and is planning to raise a similar amount in the rest of the year.

"We are looking at divestment of our investments in associates and monetisation of non-core assets. The total quantum targeted is Rs 1,000 crore, of which we have already monetised more than half of it so far this year," bank's managing director and chief executive Melwyn Rego told reporters on the sidelines of annual banking summit Fibac here today.

In June, the bank had raised Rs 540 crore by selling 18 per cent stake in life insurance joint venture with Dai-ichi and Union Bank of India to the Japanese firm.

He said the bank is looking at a variety of instruments to raise capital this year.

"We've already raised Rs 1,500 crore by way of additional tier 1 capital and a similar amount by way of tier II capital," he said, adding apart from the capital infusion by the government last month.

The government last month released Rs 22,915 crore of its budgeted Rs 25,000 crore of recapitalisation into 13 public sector banks. Of this, Bank of India got Rs 1,784 crore while the largest chunk was cornered by SBI at Rs 7,575 crore.

Talking about credit growth, Rego said the bank is targeting a credit growth of 6-8 per cent this year.

"Our focus has been very clear that it would be retail-led growth. This is both from the angle of reduction in risks and capital optimisation," he said.

He said the bank has shown considerable growth in retail side. In 2015-16, retail growth was 13 per cent and home loan and loan against property grew around 19 per cent.

Rego said BoI has a strategy called 'Star Mission 1', which includes NPA management, CASA augmentation and rebalancing of asset portfolio. The bank has shown a deceleration in growth of NPAs.

During June quarter, BoI reported Rs 741 crore net loss as against a net profit of Rs 130 crore a year ago, which is much lower than the net loss of Rs 3,587 crore reported in the fourth quarter of last fiscal.

Its gross NPAs rose to 13.38 per cent from 6.8 while net NPAs jumped to 7.78 per cent from 4.11 per cent. Total restructured standard assets stood at Rs 11,496 crore while total stressed assets rose to 16.35 per cent.

In the June quarter, Casa level stood at near 35 per cent from 29 per cent in March 2016.

"On rebalancing of the portfolio, 56 per cent of our portfolio was corporate loans in March 2015 and it has been reduced to 52 per cent in June 2016, and correspondingly the retail portfolio has increased from 44 per cent to 48 per cent," he added.