Recoveries of bad loans by banks have seen an improvement in the March quarter of FY17, both on a sequential and year-on-year (y-o-y) basis, data compiled by FE showed. According to the data, Bank of India (BoI) has reported the highest recovery of Rs1,597 crore in Q4 among the public sector banks (PSBs).
BoI’s newly-appointed MD & CEO Dinabandhu Mohapatra recently said that that the bank had started the NPA identification process much before other banks and added that initiatives taken by the government and the RBI will allow faster resolutions going ahead. “We are taking a different approach for the large accounts, the medium accounts and the small accounts and are sure that in the coming days our NPA position will be quite comfortable,” he said.
Apart from BoI, IDBI Bank, Central Bank of India, Bank of Baroda (BoB), Oriental Bank of Commerce (OBC), Union Bank of India, among others have shown y-o-y growth in recoveries.
However, India’s largest lender State Bank of India’s (SBI) recoveries dropped 26% y-o-y to Rs1,203 crore in the March quarter and rose 20% sequentially. SBI chairman Arundhati Bhattacharya told reporters that the bank’s recovery and upgardations have sped up quite a bit. “If you take the recovery, upgradations and recovery in advances under collection account (AUCA) altogether, it comes to around Rs12,111 crore. So to that extent, there too we have sort of done about 22% more than the earlier year,” Bhattacharya said.
For Canara Bank as well, while recoveries have fallen when compared to Q4 of FY16, it has risen sequentially. Its recoveries in Q4 FY17 stood at Rs327 crore, down 22% y-o-y and up 37% quarter-on-quarter (q-o-q). Rakesh Sharma, MD & CEO, Canara Bank told analysts after announcing its Q4 results that the bank has formed a strong team for recovery, who are following it up even at branch levels. “Last year we had gone for re-organisation and had moved from a three-tier structure to four-tier structure. So in the four-tier structure the regional head controls 30-45 branches while the circle was controlling even 200 branches earlier,” he explained.
Apart from PSBs, private sector banks have reported healthy growth in recoveries in Q4. For instance, Axis Bank’s recoveries and upgradations almost quadrupled to Rs2,804 crore in Q4 FY17 and ICICI Bank’s recoveries upgradations rose 81% to Rs1,413 crore in the March quarter. Separate numbers for upgradations and recoveries were not available for these private banks.
Jairam Sridharan, chief financial officer, Axis Bank told analyst after their March quarter that Q4 tends to be a seasonally strong quarter for recoveries. He added that the bank did get a lot of recoveries on its NPA pool from prior quarters.
ICICI Bank executive director N S Kannan also told analysts that the bank was working on each of the cases with the drill down list in terms of pushing for a resolution and recovering its money. “And we had said in the past also that the exact timing of the recovery cannot be determined or in between technically if some of those assets slip in, they may slip in and subsequently we may do the recovery,” he added.