Oriental Bank of Commerce (OBC) is confident of recovering its entire due from beleaguered Kingfisher Airlines by the end of this month. The state-run lender currently has Rs 55 crore outstanding loans with the private airlines company.
"We will recover our money back [from Kingfisher Airlines] by January 31 but don't ask me how," SL Bansal, chairman and managing director of Oriental Bank of Commerce, told Business Standard here today.
He declined to offer more details but added that the bank's loans to Kingfisher Airlines has slipped into non-performing asset category in the just concluded October-December quarter.
According to senior executives the lender has structured its deal with the private airlines company in a manner that ensures the bank will not lose money despite the private carrier losing its flying licence.
The lenders of Kingfisher Airlines, which has borrowed close to Rs 7,500 crore from a consortium of 17 banks, are likely to meet in Mumbai on January 18, 2013 to decide on ways to recover their money from the company.
Separately, Bansal said Oriental Bank of Commerce's restructured credit portfolio may expand by another Rs 2,500 crore as it plans to recast the loans to Moser Baer and state electricity board in Punjab.
The bank's restructured loan book is currently estimated to be around Rs 10,500 crore. "Around 50% of our restructured portfolio is loans to Air India and state discoms. We expect additions from Moser Baer [Rs 450 crore] and state electricity board in Punjab [Rs 1,200 crore]," he said.
Bansal said the new norms mandating higher provisioning on restructured assets are likely to keep the bank's net interest margin under stress. However, he expects the bank's margin to improve a tad from 2.79% at the end of September, 2012.
The bank is aiming to expand its loan portfolio by 15% in FY13.
Bansal said the bank will reduce its lending rates once its cost of funds start to decline. The bank's base rate or minimum lending rate is currently at 10.40% and is one of the lowest among public sector banks in the country.
