South Indian Bank to slash NPAs

The South Indian Bank expects to pare its net non performing assets (NPAs) to below three per cent during the current fiscal from 3.3 per cent at present.

V A Joseph, chairman and CEO, South Indian Bank, said Business Standard, "We have set a target to recover Rs 175 crore during the current financial year and have already recovered about Rs 50 crore so far."

The bank has set up dedicated separate recovery teams in 11 regional offices and had recovered about Rs 125 crore, last year.

The bank will raise Rs 150 crore through a public issue to augment its capital adequacy ratio (CAR) and to raise its networth to Rs 600 crore to meet Basel II norms, he added.

According to the Basel II norms, the bank will have to allocate additional capital to meet credit risk and operational risk arising out of providing credit.

In March 2005, the CAR was marginally above the statutory limit at 9.7 per cent which improved to 10.3 per cent after the bank had raised Rs 65 crore by tier II capital.

Post the public issue the bank's CAR will increase over 12 per cent. The bank has also received four licences to set up branches in Bhopal, Indore, Bhubaneswar and Lucknow.

The branches are concentrated in Kerala with 220 branches, 93 branches are located in Tamil Nadu while the remaining 120 branches are spread out in Karnataka, Andhra Pradesh, with a small presence in Delhi and Mumbai.