Karur Vysya sees credit growth moderating to 10-12%on NPA woes

Private sector lender Karur Vysya Bank (KVB) today said it is consolidating its book on asset quality woes, which will slow down its credit growth to the industry average of 10-12 per cent in 2018-19.

The bank expects its non-performing assets (NPAs), which hit 6.5 per cent of the total advances as of end-March, to hit a peak in the June quarter and then go down, managing director and chief executive P R Seshadri told reporters here.

"We are in the consolidation phase right now and the credit growth will be as per the industry average of 10-12 per cent for FY19," he said.

Without sharing any numbers on the NPAs it is aiming for, Seshadri said the bad assets problem has begun on loan bets made give to seven years ago on various sectors, especially infrastructure.

The bank has changed its loan diligence processes and is relying more on machines right now in order to ensure that the NPAs do not climb to such high, he said.

The bank's overall quantum of NPAs is Rs 3,000 crore, of which about Rs 170 crore have come as a result of the revisions in dud asset recognition norms introduced recently, he said, adding that the February 12 circular has contributed 0.50-0.60 per cent to the GNPAs.

It has a Rs 1,200 crore exposure to accounts in the RBI-mandated lists of 40 assets which are to be resolved under the provisions of the insolvency and bankruptcy code, he said, adding provisions on those accounts are as per central bank requirements.

The bank is focusing to grow its book more in the retail and MSME segments, he said, adding that for corporates, it will prefer lending only for working capital requirements.

The lender is comfortable on the capital buffers side with an overall capital adequacy of over 14 per cent, Seshadri said, adding that it may consider raising some money in tier-II bonds during the fiscal.