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Central government-owned Bank of Maharashtra is planning to sell bad or doubtful loans of Rs 1,500-2,000 crore to asset reconstruction companies (ARCs) by the end of this financial year.
At the end of the June quarter, its net non-performing assets (NPAs) increased sharply to 5.04 per cent of the total against 2.94 per cent in the corresponding period a year before. The bank saw a slippage of around Rs 1,400 crore in the March quarter.
In 2013-14, it had sold NPAs worth Rs 200 crore. "This is a test case. We are offering incentives to ARCs and see how the structure works. If all goes well, the bank would try to sell another Rs 1,000-1,500 crore by the end of this financial year,” said S Muhnot, chairman and managing director, on the sidelines of a banking conclave.
The bank is to get capital of Rs 394 crore in the next three to four months, as part of the government’s recapitalisation plan for public sector banks. Recently, the government announced a capital allocation of Rs 20,088 crore for a total of 13 PSBs.
This apart, the bank expects credit growth of 12 per cent in 2015-16 and deposit growth of 14-15 per cent. Net profit was Rs 59.4 crore for the June quarter, a fall of 49 per cent over the same period last year.
