IndusInd Bank gets back Rs 115 cr from Essar Oil

Privately-owned IndusInd Bank has got back Rs 115 crore it had lent to leading private sector oil refinery Essar Oil, bringing down its non-performig assets (NPA) significantly in the third quarter.

The loan, given to Essar in the late 90s, will bring down net NPAs of the bank to below 1.5 per cent in third quarter of FY09 as compared to 2.2 per cent at present.

Essar has repaid 50 per cent of the loan while the rest would be returned on Wednesday, a source said.

"The bank has been in discussion with the client for a while. It has now reached an agreement with the company to facilitate the repayment," the source said.

The Mumbai-based lender has 50 per cent of its bad loans in the retail segment and the rest in its wholesale portfolio.

With this, bank's NPAs in retail and wholesale portfolios would be in the ratio of 20:80, the source said.

IndusInd Bank had recently received a reaffirmation of the A1+ rating from rating agency Icra on its Certificates of Deposit programme, indicating highest credit quality in the short term.

When contacted, an Essar spokesman said the company does not comment on specific transactions.

As in September 2008, IndusInd Bank has a capital adequacy ratio of 12.5 per cent.