Thursday, October 6, 2022

Allahabad Bank is aiming to recover Rs 2,000 cr of bad loans every quarter in FY20

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New Delhi: State-owned lender Allahabad Bank has set for itself a target of recovering Rs 2,000 crores of bad loans every quarter during the current financial year in order to reduce its high non-performing asset level. The annual report released by the bank for financial year 2018-19 had said that it had introduced concept of SAMV (Stressed Asset Management Vertical) at head office level as well as field level with dedicated executives for effective and timely monitoring of NPA accounts and follow up of due process in NPA accounts having ledger balance of Rs 1 crore and above.

“Dedicated SAM verticals are in place to ensure recovery of around Rs 2,000 crore per quarter,” Allahabad Bank’s MD & CEO SS Mallikarjuna Rao said on its forward and future strategies. He also added that he expected fresh slippage to be moderate and be contained at approximately 1 percent per quarter.

Fresh slippages in Q4

In the March quarter of FY2018-19, the bank’s fresh slippages stood at Rs 2,819.40 crore. Agriculture and MSME constituted 31.44 percent and 28.03 percent, respectively, of the total value. Because of provisioning for bad loans, the bank had widened its net loss to Rs 3,834.07 crore for the March quarter of FY19 against a net loss of Rs 3,509.63 crore for the same period of FY18.

NPA status in Q4FY19

The bank’s gross NPAs stood at Rs 28,704.78 crore at the end of the fourth quarter in FY2018-19, while gross NPA as a percentage of total loans stood at 17.55 percent during the same period. It was only in February that the bank exited the prompt corrective action (PCA) framework of the Reserve Bank of India (RBI).

‘Each One Reach One’

In the annual report, the MD said, “During the current financial year efforts for recovery have been enhanced through ‘Each One Reach One’ to achieve recovery targets positively.” The bank had launched ‘Each One Reach One’ in November last year, under which it had urged all its employees through zonal managers and field general managers to actively participate in endeavouring for recovery in NPAs, write-offs and SMA (Special Mention Account) accounts for up-gradation/closure and arresting the slippages.

What about capital raising plan?

Elaborating on the bank’s capital raising plan for the current fiscal, Rao said that the bank will have to augment growth capital during the year and it had already obtained approval from the board for raising equity capital up to Rs 4,000 crore through various modes. The bank will now seek approval from shareholders for raising equity capital through QIP/ FPO/ Rights Issue, among others during its annual general meeting on June 28.

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