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Mangalore-based Corporation Bank is planning to sell non-performing assets worth Rs 1,000 crore to the asset reconstruction companies, its chairman and managing director SR Bansal said today.
The lender saw increase in GNPAs to Rs 7,765 crore as on end June which was 5.4% of its total advances from Rs 5,470 crore ( 3.9%) a year ago, said the sale process is expected to be completed by the end of the current quarter.
“The bank will continue to sell NPAs in the coming quarters,” Bansal said at the side lines of a FICCI-IBA seminar.
The Reserve Bank of India (RBI) has been encouraging banks to sell stressed assets and has allowed to amortize the losses arising out of stressed asset sale over eight quarters.
This is one time window provided by the banking regulator which expires in March 2016. RBI has also mandated that ARCs should pay 15% cash upfront when they acquire a stressed asset, which was 5% earlier.
The bank reported a net profit of Rs 204 crore during the April-June quarter which was a decline of 12% as compared to the same period of the previous year.
The lender which has reduced its base rate – the benchmark rate to which all loans are linked – by 10 bps to 9.9% said since corporate credit demand is not there the bank is focussing more on small enterprises and retail.
"Corporate credit is not picking up. But on the other hand, our focus in the bank is to rebalance the business. We are focusing on MSME, retail and agriculture." He said that the bank is targeting a credit deposits growth of 12% for this fiscal year.
The lender saw increase in GNPAs to Rs 7,765 crore as on end June which was 5.4% of its total advances from Rs 5,470 crore ( 3.9%) a year ago, said the sale process is expected to be completed by the end of the current quarter.
“The bank will continue to sell NPAs in the coming quarters,” Bansal said at the side lines of a FICCI-IBA seminar.
The Reserve Bank of India (RBI) has been encouraging banks to sell stressed assets and has allowed to amortize the losses arising out of stressed asset sale over eight quarters.
This is one time window provided by the banking regulator which expires in March 2016. RBI has also mandated that ARCs should pay 15% cash upfront when they acquire a stressed asset, which was 5% earlier.
The bank reported a net profit of Rs 204 crore during the April-June quarter which was a decline of 12% as compared to the same period of the previous year.
The lender which has reduced its base rate – the benchmark rate to which all loans are linked – by 10 bps to 9.9% said since corporate credit demand is not there the bank is focussing more on small enterprises and retail.
"Corporate credit is not picking up. But on the other hand, our focus in the bank is to rebalance the business. We are focusing on MSME, retail and agriculture." He said that the bank is targeting a credit deposits growth of 12% for this fiscal year.
He also said that the bank also plans to improve the share of low cost deposits. The bank has set an ambitious target of increase the share of current and savings account deposit to 25% of otal deposits from 20% now.
