Public sector lender Central Bank of India expects to recover Rs 4,000 crore from bad loans in the current financial year. The bank aims to increase the share of corporate loans and raise its Credit Deposit (CD ratio) ratio by 500 to 700 basis points by the end FY25.

“We would like to grow the business at the rate of 12 to 14% and we want to improve CD ratio from 65 to 70. Our band (for CD ratio) will be 70 to 72 for the next March 25,” MV Rao, MD & CEO, Central Bank of India told analysts in earnings call.

The bank’s asset quality remained stable during the fourth quarter as it Gross Non Performing Assets (GNPA) position was unchanged at 4.50 % of gross advances as of March-end 2024 compared to December-end 2023. Its Net NPAs position improved slightly to 1.23% of net advances against 1.27%.

It will set up its efforts to increase recovery from written-off accounts.

“We intend to further step up recovery efforts in written-off accounts and if we are able to recover in range of Rs 1,500 to Rs1,800 crore that is going to boost our operating income,” said a senior official added.

Last year, the bank assigned five accounts to National Asset Reconstruction Company Limited (NARCL) and this year it expects to assign six more accounts. Around 10 to 15 accounts are due for settlement in National Company Law Tribunal (NCLT) in the current year, said the official.

It is looking to increase the share of corporate loans by two percentage points and reduce the share Retail, Agriculture and MSME loans. Currently the share of Retail, Agriculture and MSME loans portfolio is 65% while corporate loan is 35% in its total credit book.

“We were sticking to the RAM (Retail, Agriculture and MSME loans) and corporate at 65 and 35 with plus or minus 5%. Now we are revising that, our RAM will be around 63 and corporate will be at 37 with plus or minus 1%,” said Rao.

The bank expects its net interest margins to shrink in the current fiscal but it will not let it go below 3%. Its NIM contracted to 3.58% in fourth quarter of FY24 from 4.01% in the same quarter in the previous year. However, on quarter on quarter basis, the bank managed to expand its NIM which increased 30 bps from 3.28% at the end of December 2023.

“NIM will not come down drastically (in the current financial year), it will be above three and that is sacrosanct for us,” said Rao.