Recovery bogey haunts 5 PSBs with high NPAs

Slippages have moderated in Q3 but delays in resolution of bad loans are making life difficult

Slippages have moderated in the December quarter but delays in resolution of bad loans are making life difficult for five public sector banks. Indian Overseas Bank (IOB), UCO Bank, United Bank of India (UBI), IDBI Bank and Bank of Maharashtra have the highest gross non-performing assets (GNPAs) as a percentage of their gross advances.

IOB said it planned to bring down its GNPAs to 20 per cent. The bank’s GNPAs declined in the December quarter by ~200 crore but its percentage rose. The focus is recovery in those accounts where the bank is carrying 100 per cent provision or is likely to make higher provisions.

Bank of Maharashtra’s GNPAs rose to 15.08 per cent in the quarter from 7.97 per cent in the same period a year ago. It kept aside ~532.17 crore for provisioning of bad loans, against ~244.91 crore in the year-ago period.

IDBI Bank’s standard restructured loans, at 7.2 per cent of total loans, also remain higher than its peers. Its GNPAs rose to 15.2 per cent in December from 10.9 per cent in March.

Stressed assets and the resultant high credit costs have strained IDBI Bank’s earnings. The bank reported a loss of ~3,660 crore in 2015-16 and ~1,906 crore in the first nine months of 2016-17.

Banks have had limited success in recovering dud loans to the iron and steel, power and infrastructure industries. Schemes for debt restructuring have not made much headway. UBI Managing Director and Chief Executive Officer Pawan Bajaj said he was planning to use the insolvency law to recover dues. The bank’s GNPAs rose to 15.98 per cent in December from 9.57 per cent a year ago.

Canara Bank has invoked the foreclosure law in 9,200 cases and will hold an online auction on March 8 for properties charged to it. It has declared 475 wilful defaulters with an exposure of ~3,600 crore.