Iob To Slash Npas To 5.7%

Indian Overseas Bank (IOB) is planning to put more emphasis on recovery of non performing assets (NPAs) and lowering the cost of funds in the current financial year. The Chennai-based bank is targeting to bring down the net non performing assets to 5.7 per cent from the existing 6.32 per cent level, by recovering about Rs 350 crore worth dues in this fiscal.

S C Gupta, chairman and managing director of IOB, said that the recent ordinance issued by the government for easy recovery of sticky assets, the establishing of debt recovery tribunals and upgradation of loans from doubtful to sub standard and standard categories by the bank will help it to reduce its NPAs significantly.

"We have recovered about Rs 350 crore last year by way of cash recoveries, write-offs and upgradation of assets," Gupta said.

IOB is also trying to bring down its cost of deposits from about 7.29 per cent as on March 2002 to less than 7.0 per cent by end of the year.

We could reduce the cost of deposits by 15 basis points in the last fiscal by putting more emphasis on savings bank and current account mobilisation, Gupta said. The bank has achieved a business volume of Rs 47,831 crore last year with deposits at Rs 31,808 crore and advances at Rs 16,023 crore. It is aiming at 16 per cent volume growth for the current year by crossing the Rs 50,000 crore landmark. It is targeting a Rs 2,000 crore growth in the savings bank category alone.

We have already crossed the Rs 49,000 crore mark for the quarter ended June with deposits touching Rs 32,689 crore and advances at Rs 16,505 crore, Gupta said.

The bank estimates that its capital adequacy will come down to about 10.5 per cent from the 10.82 per cent with an increase in the asset base.

"We will raise about Rs 175 crore as Tier II capital this year to shore up the capital adequacy ratio (CAR) level," Gupta said.

The bank is also planning to add another 75 automated teller machines (ATMs), most of which will be off-site, by end of this year. This will increase its total ATMs to 130. It has recently availed a Rs 60 crore loan from the World Bank to implement its technology upgradation plans. It has so far networked 213 branches in 18 centres to facilitate anywhere banking and planning to network another 145 branches in this year.