Icici Sticky Assets Up 80 Points

The non-performing assets of ICICI have increased from 6.8 per cent in March 1997 to 7.6 per cent by March 1998. KV Kamath, managing director, ICICI, said that the winds of liberalisation which brought about delicensing, lowering of tariff barriers and increased competition, resulting in the performance of the industry getting affected there by contributing to NPAs.

Over 92 per cent of ICICIs assets are standard while the proportion of assets classified as substandard and doubtful are 4.9 per cent and 2.8 per cent respectively.

Kamath said that the organisation has adopted a pro active approach with respect to recoveries. This is done by a separate division to facilitate recovery of NPAs. Recovery is done by identifying and extracting locked-up value in problem cases. These locked-up values that are generally present are real estate, brand equity, liquid investments and receivable. In certain cases the mergers and acquisitions or one-time settlements route to is also taken to recover the loans that are outstanding.

 

Of the net loan assets NPAs of Rs 369.9 billion nearly Rs 28 billion is net NPAs. Though the net NPAs has gone up the NPA ratio after adjusting for collaterals that ICICI has on its loans has remained unchanged at 0.1 per cent on March 31, 1998. Man-made fibres industry is the major contributor to the NPA, nearly 17 per cent of the NPA is from this industry and textiles and chemical another 11 per cent each.

Which amounts to Rs 11.1 billion of the total NPAs of Rs 20.5 billion. The value that is assigned to the collateral is depreciated book value, or realised value based on independent valuers.

For improving the asset quality it is working towards in early identification of problems and an aggressive approach towards wilful defaulters. And in the exit strategy for unviable and historical NPAs, it stresses on time value of recovery and collateral used to enforce settlements.

The time period for recovery has been reduced from 4.7 years to 3.7 years which has resulted in the increase in the time value of recovery to 70 per cent.