Lakshmi Vilas Bank (LVB), which is addressing its capital issue through merger with DBS Bank India, aims to recover Rs 400-500 crore over the next 4-5 months, said a senior official of the bank. It will largely be through one-time settlement and recovery, said the official.
The bank’s asset quality deteriorated as the gross non-performing assets (NPAs) moved up at 24.45 per cent of the gross advances by the end of Q2 FY21, against 21.25 per cent a year ago. Sequentially, it improved from 25.40 per cent by the end of June 2020 quarter.
Gross NPAs were at Rs 4,063.27 crore as of September 2020, against Rs 4,091.05 crore by the year-ago month. On the other hand, net NPAs or bad loans showed improvement at 7.01 per cent (accounting for Rs 946.72 crore) from 10.47 per cent (Rs 1,772.67 crore).
In 52 days, recoveries from NPA and through upgradation was around Rs 50 crore. The bank sorted out one-time settlements of over Rs 150 crore. “So, we would see at least Rs 200 crore-plus come in bank. You should write back into the capital. In that sense, we were already on that track,” said Shakti Sinha, director, Lakshmi Vilas Bank.
According to Sinha, there is no criminality in the bank. “The problem was it went behind corporates to grow big. It latched into consortiums, where the bank doesn’t have any say.”
He said consortium was at 60 per cent of the total NPAs. “I see very little scope of getting it back and nearly 70 per cent is written off.” The bank has decided to focus on its strength — retail.
Sinha, who was one of the three-member board appointed by the RBI to run the bank till the administrator is appointed, said the amalgamation should allow the bank to be retail-focused till the employees are trained and increased the capability in corporate.
He said the bank’s network of around 550 branches and 2 million customer base should be taken into account during valuation.