Indian Bank eyes Rs 500 cr NPA recovery

Indian Bank has set a target of recovering another Rs 500 crore non-performing assets (NPAs) in the current financial year, after making recovering Rs 418 crore in 2005-06.

K C Chakrabarty, chairman and managing director, said, "This year we expect to recover around Rs 500 crore of NPAs. Increase in real estate value (that has been used a collateral in many cases) will be prime driver behind the recovery." Last year, the bank recovered Rs 418 crore against Rs 311 crore in 2004-05.

The current gross NPA as on March 31,2006 stood at Rs 669 crore, resulting in a ratio of gross NPA to gross advance at 2.91 per cent. The net NPA recorded was at 0.79 per cent, he added.

Meanwhile, the bank is waiting for the amendment to the Banking Regulation Act before it can take a final call on its initial public offer (IPO). With a capital base of Rs 743 crore, the bank had already sought permission for converting a part of the equity into preference capital.

"We have sought conversion of at least Rs 400 crore into preference capital, in which case our capital would come down to Rs 343 crore. We are now waiting for the amendment to the Act for the same," he added.

Though he did not provide details about the size of the issue but hinted that they might keep their offering at the minimum level, as per Sebi requirement.

The bank was targeting 25 per cent increase in net profit in the current financial year. In 2005-06, the bank recorded net profit of Rs 504.48 crore, a growth of 23.50 per cent over the previous year.

For the current financial year, the bank has set target of 16 per cent deposit growth and 20 per cent growth in advances. The bank's total business stood at Rs 63,290 crore in 2005-06 with deposits of Rs 40,805 crore and Rs 22,485 crore advances.

The bank would be focusing on agriculture, SME, education and retail during the year, Chakrabarty added.