With a burgeoning of non-performing assets (NPAs), Punjab National Bank wishes to sell as much as possible to asset reconstruction companies (ARCs).
Talking to Business Standard on the sidelines of the State Level Bankers’ Committee Meeting here on Wednesday, executive director Gauri Shankar said the aim was to sell NPAs worth Rs 1,000-1,500 crore in the third and fourth quarters (October-April) of the financial year.
The proportion of gross NPAs to the total was 6.74 per cent and of net NPAs was 4.06 per cent in the April-June quarter. The results of the second quarter, July to September, would be announced this Friday.
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According to Shankar, these slippages were inevitable, as a large part had been raised by infrastructure companies and their projects have a long gestation period.
In August, senior bank officials had denied a move to offload NPAs on ARCs. Shankar evaded a direct reply on a query regarding the impact on the bank's growth projections in the wake of rural distress due to a global fall in commodity prices and with drought in parts of India.
He said banks were sanguine over the initiatives taken by the Centre and the Reserve Bank of India to stimulate the financial sector. “We have slashed interest rates by 175 basis points under the RBI guidelines and it has helped restore credit offtake from the realty sector but demand from other sectors remains lukewarm. A restructuring package for state discoms (power distribution companies) by the Government of India is also in the pipeline and this can also help banks.”
On branch expansion, he said, “There is always room for brick and mortar expansion but as of now, the focus is digitalisation.”