Idbi Bank Reduces Npas To 2%

IDBI Bank's strategy to derisk its portfolio seems to have helped the bank pare its non performing assets (NPAs). The bank, which is seeking to bring down its NPAs to 1.5 per cent of its advances by March 31 has already brought down its sticky assets from 5.24 per cent on end-March 2001 to around 2 per cent now.

IDBI Bank managing director and chief executive officer (CEO) Gunit Chadha said, "The bank has been following a strategy of derisking the balance sheet. To achieve this objective the bank has exited from weaker credit portfolios with an aggressive recovery strategy. The bank has been able to bring down its net NPAs from around 5 per cent on March 31, 2001, to around 2 per cent now. We plan to bring down the net NPAs to 1.5 per cent by March 2002."

 

The net NPA of the bank as on March 31, 2001, was Rs 90 crore while the gross NPA was at Rs 120 crore.

He added, "There has been a significant upgradation in the credit quality. The provisioning cover for the assets has been increased to more than 50 per cent."

IDBI Bank has also been focussing on bringing in quality new assets. Around 92 per cent of the incremental build-up in assets by the bank are A grade or better, said Chadha. He added the task of de-risking the portfolio was difficult because of the recessionary trends. More than 83 of the customers are graded A or better compared to 64 per cent in December 2000. The customers, rated below BBB, have been brought down to 5 per cent in December 2001 from 12 per cent in March 2001.

"The bank has exited from accounts where there was an unduly large exposure or from industries in which we were not comfortable," said Chadha. The loans included working capital loans, short term and also long term loans. The bank allowed the customers to prepay some of the high interest rate loans which these corporates had taken.

The bank has also been able to recover around 20 per cent of its NPAs since March 31, 2001. Chadha also pointed out that IDBI Bank was the only bank which classifies NPAs on a 90-day overdue period compared to the RBI norm of 180 days.