The public sector bank reported gross NPAs on loans at 9.98% as of March 2022, down from 10.46% in the quarter ended December. Das said he expects the bank’s NPAs to be below 8% in March 2023, due to a combination of improving bad loan recovery and preventing fresh slippages.
“Our target is to recover Rs 2500 crore per quarter and let only Rs 600 crore slip so that we are in positive territory on NPAs. By the third week of June, we have recovered Rs 1900 crore so far in the first quarter. Das said.
However, a major part of the recovery depends on the affairs of the bank. National Company Law Tribunal (NCLT) in which out of Rs 45,000 crore gross NPAs of the bank, Rs 32,000 crore are awaiting progress. Bank will also sell bad loans worth Rs 2400 crore to newly launched people National Asset Reconstruction Company Limited (NARCL).
BoI is the prime lender to boost debt-laden Kishore Biyani Future Group On which the lenders owe more than Rs 25,000 crore. In April it initiated insolvency proceedings against Future group which is yet to be accepted by the National Company Law Tribunal (NCLT). Das said the bank had identified Rs 600 crore depreciation from Future Group for the quarter ended June 2022 and has now fully provided for its exposure to the group.
Das said the higher recovery will complement the bank’s growth plans as it looks to expand its loan book with bigger bets on the mid-cap segment.
“This year our focus is more on the mid cap segment where we can do much better. We are envisaging 8% to 10% credit growth this fiscal which is at or above the system. We are looking at our net interest margin. We expect credit costs to be as close to 3% as possible and a maximum of 1% because we have made very active provisioning. Housing and retail will continue to grow faster than the rest,” Das said.
He expects corporate debt to rise this year after shrinking last year mainly due to demand from key sectors such as steel and cement.
“I expect big bang growth in the construction sector, with 132 sectors having back-and-forth integration, which along with the government’s thrust for infrastructure, will create a multiplier effect.” Das said.
Corporate demand for the bank is muted as even half of the sanctioned Rs 65,000 crore has not been utilised.
Das said the bank’s board has approved equity raising of Rs 2500 crore, but currently its capital adequacy is 17%, and the call for raising more equity will be taken only by the end of September.