Kolkata, State-run lender Allahabad Bank is looking at a recovery of around Rs 5,500 crore in the current fiscal, an official said on Wednesday.
The bank submitted a roadmap to the Centre and if everything goes “well and smooth” as per its projections, it was likely to come out of prompt corrective action (PCA), imposed by the Reserve Bank of India (RBI), by March 2020, bank’s Executive Director N.K. Sahoo said.
“We are expecting Rs 3,000 crore recovery through resolution in NCLT (National Company Law Tribunal) in the entire financial year, another Rs 2,000 crore through normal recovery process and Rs 400-500 crore through asset sales,” he said.
“We have recently recovered around Rs 1,300 crore from the resolution of Bhushan Steel and Electrosteel Steels accounts through NCLT,” he added.
The bank has an outstanding exposure of Rs 4,000 crore in several accounts referred to NCLT including Uttam Galva, Alok Industries, Essar Steel and among others, Sahoo said, adding that it was hopeful of recovering from these accounts in the current fiscal.
The bank may have to take a hair-cut up to 50-60 per cent in these accounts, he added.
“We have created a NCLT cell to effectively monitor the NCLT accounts. We have almost 94 (stressed) accounts referred to NCLT by us as well as by other lenders amounting around Rs 12,000 crore.
“Almost 45 per cent of our gross NPA is in the NCLT,” Sahoo told shareholders here at the 16th Annual General Meeting of the Allahabad Bank.
The meet was chaired by Sahoo after the bank’s Board of Directors had decided that lender’s MD and CEO Usha Ananthasubramanian be “divested of all functional responsibilities of the bank” following the Central Bureau of Investigation’s chargesheet detailing her alleged role in the over Rs 13,000 crore Punjab National Bank (PNB) scam.
Capital requirement for the lender during the current fiscal would be close to Rs 9,000 crore, Sahoo said on the sidelines of the meeting.
“The bank would require close to Rs 9,000 crore worth capital this fiscal,” he said.
Of the total capital requirement, the bank requested the government to pump in Rs 7,000 crore and was looking to raise close to Rs 1,900 crore through different modes this fiscal, according to Sahoo.
This apart, it is hopeful of raising close to Rs 500 crore from sale of non-core assets, he said.
“A roadmap has been submitted to the (Finance) Ministry. If everything goes well as per the bank’s projection, we are expecting to come out of PCA by March 2020,” he said.
The lender is rebalancing its credit book with an objective to increase the share of retail loans to 50 per cent of total advances from the current 45 per cent and at the same time, it is looking to bring down share of corporate loans to 50 per cent, he said.
“We are not going for bulk deposits and trying to shrink our balance sheet. We want to make it more healthy. The business that we are projecting this financial year is around Rs 3.65 lakh crore,” Sahoo said.
At the end of the 2017-18, gross NPA (non performing assets) of the bank stood at Rs 26,562.76 crore as compared to Rs 20,687.83 crore in FY 17 (2016-17) and Net NPA remained at Rs 12,229.13 crore as on March 31, 2018 as against Rs 13,433.51 crore in FY 17.
Owing to high non-performing assets (NPA) and negative return on assets (RoA) for two consecutive years, the bank was brought under prompt corrective action framework by the RBI on January 2, 2018, Sahoo told shareholders.
In fact, subsequently, the RBI had imposed additional restrictions on Allahabad Bank under the PCA framework. It was asked to restrict expansion of risk-weighted assets, reduce exposure to high-risk loans and restrict accessing or renewing wholesale deposits.
The bank had posted a net loss of Rs 3,509.63 crore in the March quarter of 2017-18.
