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Poornima Mohandas

Mumbai , June 4

ICICI Bank is aiming to end its `legacy NPA issue' created by the reverse merger with ICICI and dismantle the special asset cell constituted to take care of `stressed assets' by March 2005.

"We want to bring down our net NPA number to virtually nothing. It cannot be brought down to zero for any bank in the world. But by March 2005 there will be only a handful of bad loan cases left. We will do it through one-time settlements, CDR restructuring, recoveries, write offs and asset sales to ARCIL," said Ms Kalpana Morparia, Deputy Managing Director, ICICI Bank.

The second largest bank in the country has been grappling with a large non-performing loans issue ever since the reverse merger with the erstwhile ICICI in March 2002.

As on March 2004, the net NPA figure was 2.87 per cent of net advances. The net NPA in terms of numbers was Rs 2,037 crore and the gross NPA number was Rs 6,500 crore.

In the previous year, the net NPA figure was higher at 4.92 per cent.

This reduction was possible through Rs 1,200 crore of asset sales to the Asset Reconstruction Company of India Ltd (ARCIL), Rs 470 crore of provisions from handsome treasury gains, CDR restructuring, recoveries and settlement with borrowers.

Many textile and steel companies have made repayments thanks to the upswing in the economy, said Ms Morparia.

The bank has been carrying out accelerated provisioning since 2001 to maintain over 60 per cent provision coverage.

"We want to take the NPA to a safe level at which it will not pose a concern to the organisation or its shareholders," said a senior official in the department.

According to Ms Morparia, the Securitisation Act will be like the Indian Penal Code. It will act as a good deterrent for borrowers from defaulting. Borrower discipline will be ensured due to the threat of dispossession of property.

By April 2005, ICICI Bank will dismantle the `Special Assets Management Group', which had been constituted on a temporary basis in 2000 in the erstwhile ICICI. The group scanned through the entire portfolio of the bank and took up bad assets and assets that were on the verge of slipping into bad into its hold.

The organisational structure of ICICI had then been five principal groups - Retail Banking, Wholesale Banking, International Business, Corporate Centre and Project Finance & Special Assets Management.

The team numbering 160 people comprised the brightest people in the group; it is down to 45 people now all of whom will be transferred to the corporate banking team by end March.

More Stories on : Non-Performing Assets | Private Banks

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