At present, there are no guidelines for banks that seek to arrive at a compromise on sticky accounts. The legal option is a long-drawn-out process, and the debt recovery tribunals (DRTs), too, are not in a position to provide speedy recourse as the tribunals have not been set up in every state, Kannan said.

Till now, banks have been arriving at settlements according to their own internally determined formula. The RBI has decided to offer banks a broad set of directives within which they can determine an approach best suited for the bank, Kannan said.

All banks will not have to settle with a non-paying client on the same terms. A bank steeped in NPAs will settle for softer measures where as a bank which has its NPAs reined-inwill like to talk tough, Kannan said. Bank of Baroda in its settlements has asked for the principal and simple interest at the rate of 10 per cent for the period of the loan, he said. BoB has net NPAs of 6.5 per cent of its advances which amount to about Rs 2,000 crore. The bank has set-up asset recovery branches which are dedicated to recovering bad loans, he said.

BoB has got clearance from its board for taking over two foreign banks in London and Hong Kong, it had got in-principle clearance from its board some months back, he said. Both the foreign banks are jointly owned by Union Bank of India, Indian Bank and BoB, the equity of the two banks is equally divided between the three. BoB has received clearance from the regulatory agency in both UK and Hong Kong for buying out the other two shareholder. The management of the banks will soon come under BoB's management, Kannan said.

BoB is expecting the government to clear the way for directors representing public shareholders to come on its board soon.About 33 per cent of BoB's equity is with the public which means that four public shareholders will come on its board. The bureaucratic clearance is expected to come soon from the law ministry, Kannan said.

Kannan also announced a dividend pay-out of Rs 58.80 crore for 1997-98 to the government. Dividend has been paid at the rate of 30 per cent. Total dividend outgo including dividend tax has increased to Rs 91.58 crore from Rs 58.37 crore in 1996-97.

For the first quarter of 1998-99 the bank has recorded higher average business resulting in operating profit of Rs 258.88 crore. After making provisions on a pro-rata basis the bank has shown a net profit of Rs 126.50 crore. The return on average assets comes to 1.10 per cent. The return on net worth has improved to 21.53 per cent from 19.53 per cent. Earning per share has gone up to Rs 17.22 whereas the book value per share works out to Rs 80. Despite volatile interest rates the bank has improved its interest spread to 3.37 per cent from 3.23 per centduring the first quarter, Kannan said.

The bank has also instituted two awards for its employees which are called the Vigilance Award and the Honesty Award. The first award is given for warding off threats to the bank from frauds and robberies and the second is given to employees who show high levels of integrity at their work.