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Thursday, Feb 28, 2002

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Money & Banking - Non-Performing Assets

Big-ticket recoveries elude Indian Bank

M. Ramesh

CHENNAI, Feb. 27

INDIAN Bank had hoped to nourish its profits this year with a couple of big-ticket recoveries, but they have eluded the bank.

Ravi Shankar Industries had agreed before the Debts Recovery Tribunal in Chennai to pay the bank a compromise sum of Rs 123 crore. The money should have come early this financial year, but the company sought and got time till December 31, 2001. December came and went, but not a rupee from Ravi Shankar Industries passed the bank's front door.

The Ravi Shankar Industries group, which is involved in real estate development and owns Gemini Colour Lab (a films processor), owes Indian Bank Rs 160.25 crore.

Further, it owes Rs 18.53 crore to Indbank Housing Finance and Rs 1.47 crore to Indbank Merchant Banking, making in all, a total of Rs 180.25 crore to Indian Bank and its subsidiaries.

This amount includes the accumulated interest till June 16, 1997, the date the suit was filed against the group, for recovery.

However, the book balance, or the amount outstanding on the date the loan turned non-performing, was Rs 123 crore. A `consent decree' was obtained at the DRT, in which both parties settled for Rs 123 crore. "Our patience is running out," said a senior bank official, pointing out that the bank would auction off the real estate offered as security.

The other large account, MVR Industries, owes the bank around Rs 230 crore. In private conversations with presspersons, Indian Bank's officials last year used to dismiss this amount as unrecoverable.

However, after the promoter of MVR Industries, Mr M. Varadaraju was apprehended by the police in France, there seems to be some renewed hope on this account. Officials say that at least some money could be salvaged by getting the DRT to let the bank liquidate the security, said to be worth about Rs 100 crore.

Last year, Indian Bank could report an operating profit mainly because it recovered Rs 136 crore from the DSQ group. This year, however, no large recoveries happened. In fact, in the first nine months of the current year, recoveries amounted to Rs 159 crore, as against Rs 549 crore in the whole of last year.

Officials of the bank are now hoping that these elusive big-ticket recoveries could come in handy next year. For the current year, if the bank gets recapitalisation from the Government, it is news good enough, they say.

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