Note Ban Hits Loan Re­cov­ery Badly

For top eight lenders, re­cov­er­ies have fallen by nearly a quar­ter from sec­ond quar­ter to third

The Economic Times - - Companies: Pursuit Of Profit - Saloni.Shukla @times­group.com

Mum­bai: De­mon­eti­sa­tion has not only damp­ened banks’ core busi­ness of lend­ing, it has also hit them where it hurts — loan re­cov­ery. Re­cov­er­ies from bad as­sets have fallen nearly a quar­ter among the top 8 lenders.

Banks, which had set lofty tar­gets for loan re­cov­er­ies at the start of the year af­ter the As­set Quality Re­view ex­er­cise, are likely to miss their tar­gets as bad loans con­tinue to pile up. Top banks re­cov­ered just ₹ 7,909 crore from such loans at the end of the De­cem­ber quar­ter against ₹ 10,177 crore at the end of the Septem­ber quar­ter.

These num­bers are dis­mal, es­pe­cially when com­pared with the quan­tum of dodgy loans banks have ac­cu­mu­lated since De­cem­ber last year. Data com­piled by ETIG shows that at the end of Septem­ber 2015, banks’ ab­so­lute gross non-per­form­ing as­sets stood at ₹ 3.50 lakh crore, which climbed by a stag­ger­ing ₹ 1 lakh crore to ₹ 4.49 lakh crore in merely 3 months when the RBI an­nounced the as­set quality re­view ex­er­cise.

At the end of March last year, gross non-per­form­ing as­sets in 41 listed banks stood at ₹ 5.91 lakh crore. The coun­try’s largest lender State Bank of In­dia showed re­cov­er­ies of ₹ 1,003 crore against ₹ 1,344 crore se­quen­tially.

For the 9-month pe­riod of this fi­nan­cial year, the bank man­aged to re­cover only ₹ 3,994 crore and up-

Top banks re­cov­ered just 7,909 crore in Q3 against 10,177 crore in quar­ter ended Septem­ber

graded ac­counts worth ₹ 2,434 crore.

“We were very hope­ful of see­ing most of the res­o­lu­tions come in dur­ing this quar­ter. But de­mon­eti­sa­tion has ac­tu­ally pushed this by an­other quar­ter,” said Arund­hati Bhat­tacharya, chair­man, State Bank of In­dia.

For ICICI Bank, re­cov­er­ies and up­grades slowed to ₹ 625 crore against ₹ 800 crore se­quen­tially. It also man­aged to sell loans worth ₹ 87 crore to as- set re­con­struc­tion com­pa­nies.

“We have al­ways said that the re­cov­ery as well as the de­ci­sion-mak­ing en­vi­ron­ment have been quite chal­leng­ing -- we con­tinue to nav­i­gate the en­vi­ron­ment and press for­ward on all the res­o­lu­tions,” said NS Kan­nan, ED, ICICI Bank.For Axis Bank, re­cov­er­ies and up­grades nose­dived to ₹ 350 crore com­pared with ₹ 1,073 crore quar­ter-on quar­ter, a fall of nearly 250%.

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