Vijaya Bank may seek extension to meet 70% provisioning norm

State-owned Vijaya Bank might seek a second deadline extension for meeting the 70-per cent provision coverage ratio (PCR) norm even as the pace of rise in its non-performing assets was falling, Chairman and Managing Director Albert Tauro said.

“In case we are not able to reach (70 per cent), we will once again make an appeal...(for) a couple of more quarters,” Tauro said. “We will take stock (of the provision coverage ratio)...around Mid-March .” As on December 31, the bank’s PCR stood at 67.6 per cent.

The deadline to meet the Reserve Bank of India’s PCR norm was September 30, 2010, but was extended for some banks. State Bank of India, the country’s largest bank, has time till September 30, 2011, while Mangalore-based Vijaya Bank has time till March 31. Private lender ICICI Bank, also given an extension until March-end, has already met the deadline.

The bank was targeting gross non-performing assets below two per cent of the total advances by the end of March, but it looked difficult, Tauro said. It plans to sell Rs 100 crore of bad loans in the fourth quarter and was in the process of identifying them. So far this financial year, it has sold Rs 120 crore of bad assets.

As on December 31, gross non-performing assets stood at 2.5 per cent of the total advances. The net bad assets were at 1.38 per cent. The bank hopes to bring down bad loans below one per cent by the end of this quarter.

The bank has so far restructured loans worth Rs 2,642 crore — around six per cent of its total loan book. Of the assets restructured this financial year, around Rs 300 crore had turned bad, Tauro said.

Credit growth, composition
The state-owned bank expected to end the financial year with loan growth of 15-16 per cent, Tauro said. In June, the chairman had estimated credit growth at 20-21 per cent and had, in January, cut his forecast to 18 per cent. Currently, credit growth was 11-12 per cent , he said.