Managing director Murali Ramakrishnan also told ET in an exclusive interview that the huge net profit it has booked in the fourth quarter (Rs 272 crore) due to sharp fall in bad loan provisioning could be a one-time situation. But the bank will remain profitable. Because it has gone through its worst phase. All the important parameters are now showing significant improvement since taking over on October 1, 2020.
“We are not more vulnerable as we were at a time when our capital adequacy was very low, provision coverage ratio was low, bad debt ratio was high, skill level was low. They are all behind us. We have achieved stability but yes, there is scope for further improvement.”
He said the concerns regarding the legacy corporate book have been largely resolved with its incremental book showing slight lapses.
The bank estimates that Rs 600 crore may fall into bad loans from the restructured book of Rs 2,400 crore, while another Rs 1,000-1,100 crore loan may go non-performing this fiscal.
“Till 2020, there were problems related to corporate books, due to the concentration of large risk. Back then, there were some problems in the SME portfolio due to the floods in Kerala. In FY21 and FY22, we had a slippage of around Rs 4,400 crore, mainly in the sectors of SME and retail,” Ramakrishnan said.
The Kerala-based lender’s total loan advances stood at Rs 61,800 crore at the end of March.
“The entire book will be churned out in about three-four years. We have already churned for a year and a half. Out of Rs 61,800 crore, about Rs 22,000 crore is on account of new loans. As I am talking to you, this year around Rs 8,000-9,000 crore has been disbursed,” he said, adding that the bank is aiming to grow at least 10% this year.
“This was reported when the economy was projected to grow at 8.5%. Though the GDP estimate was revised downwards, we still want to grow in double digits,” said the MD, who retired
In early 2020 after spending more than two decades.