With NCLT cases, a fifth of IOB’s bad loans are under resolution: MD
government’s UDAN scheme that aims to connect small towns. The connectivity scheme that offers subsidy on some seats on every flight is likely to seek applications over the next few weeks for the second round of allotment. IndiGo expects to induct about seven aircraft by March, but could speed to 20 ATR by December 2018 or more, the same executive said. IndiGo declined to comment.
Knowing the coming capacity induction rivals are already expanding their footprint fast.
SpiceJet on Monday announced its third daily direct flight on the UDAN routes of Hyderabad-Pondicherry-Hyderabad effective August 16.
With a fleet of 20 Bombardier Q400 planes it has already won 11 UDAN routes to unserved markets of Adampur, Kandla, Pondicherry and Jaisalmer besides Porbandar and Kanpur.
Air India’s regional operations under Alliance Air is also expanding under the same scheme and will become 20 plane operations by early 2018.
Capt GR Gopinath’s Air Deccan is also set to launch its operations in September with a 19-seater Beechcraft aircraft.
With large corporate accounts identified for insolvency proceedings, a fifth of Indian Overseas Bank’s (IOB) gross bad loans are under resolution, according to a top official of the Chennai-based lender.
Banks have initiated insolvency proceedings against 12 accounts following the Reserve Bank of India’s June 13 directive.
The bank, under RBI’s prompt corrective action, has exposure to 10 of these accounts, which forms 21% of its over ₹35,000 crore gross non-performing assets (NPA), said R Subramaniakumar, managing director and chief executive officer.
These 10 accounts also contribute to nearly half of its corporate NPA book, he added.
Most of the accounts have adequate provision coverage to the tune of 38-40% and hence it is not expected to impact bank’s balance sheet substantially, he said.
“As per the RBI’s guidelines, I have to provide 50% in three quarters. I will have to provide 10% incrementally, which otherwise could have come due to ageing of these accounts,” he said.
For cases referred to National Company Law Tribunal (NCLT) for insolvency proceedings, the RBI has asked banks to set aside 50% provisioning against secured exposures and 100% against unsecured exposure. Banks can spread them over a period of three quarters starting July. Nearly all its exposure of the bank to these 10 accounts is fund-based, he said.
As part of improving asset quality, for large accounts other than the 10 cases, IOB has evaluated each case for a possible resolution using central bank’s various restructuring schemes, such as scheme for sustainable structuring of stressed assets (S4A).
The lender has also started outreach programmes to resolve bad loans form retail, agriculture and small and medium enterprise loan book.
According to Subramaniakumar, recovery from NPAs is the top priority for the bank.
With these plans in place, the bank has set a target of increasing recoveries by at least 25% on-year in the current fiscal.
In fiscal 2017, IOB had recovered over ₹8,700 crore from bad loans.
With 22.39% gross NPA as of the end of March 2017, IOB tops the list.
However, Subramaniakumar said that this has to be seen from the context of slowing credit growth because the number is a part of loan book.
He added that the bank’s focus is on growing non-corporate book and chalked plans to increase retail, agriculture and SME disbursements.