The Hindu Business Line : Andhra Bank to get tough on recoveries

Plans for bad loans
Written-off accounts to be followed up.
Wants to prevent slippage in asset quality.
Vigorous drive to cover all avenues such as Lok Adalats, compromises

Hyderabad , June 16

Having emerged as the public sector bank with the lowest net non-performing assets (NPAs) to net advances for the fiscal ended March 2006, Andhra Bank has embarked upon another task of substantially reducing its gross NPAs to around Rs 300 crore by the current fiscal-end from Rs 436.91 crore as at the end of March 2006.

During the last fiscal, the bank could reduce its gross NPAs to 1.94 per cent from 2.46 per cent in previous fiscal and net NPAs to 0.24 per cent from 0.28 per cent.

The bank is expecting fresh addition of Rs 118.09 crore of gross NPAs during the current fiscal. Effectively, the bank proposes to reduce the gross NPAs by Rs 255 crore, which is 62 per cent improvement over last fiscal's reduction of Rs 157 crore.

Of the current fiscal target, Andhra Bank plans to upgrade 21.57 per cent of NPAs (Rs 55 crore), recover 21.57 per cent of NPAs (Rs 55 crore), enter into compromise deals for 17.65 per cent of NPAs (Rs 45 crore) and resort to technical write off of 39.21 per cent NPAs (Rs 100 crore).

According to the Executive Director, Mr Kalyan Mukherjee, the bank proposes to go aggressive in recoveries, even in written off accounts. As against Rs 62.71 crore of recoveries from written-off accounts in 2004-05 and Rs 45.18 crore last fiscal, the bank aims to recover Rs 121 crore from this head during the current fiscal.

"Our top priority areas would be reduction in NPAs and prevention of slippage in asset quality. We would ensure that the growth continues in proportion of standard advances in total advances. Towards reduction in NPAs, we propose vigorous recovery drive through Lok Adalats, compromises, settlement schemes and also by invoking provisions of SARFAESI Act. Aimed at continuous follow-up of NPA accounts with the objective of formulating strategies account-wise for recovery overdues in NPA and technically written-off accounts, we are constituting asset recovery cells in select zones," Mr Mukherjee told Business Line.

According to him, the bank has been significantly improving its standard assets ratio and reducing sub-standard and doubtful assets. The bank could improve its standard assets to 98.06 per cent last fiscal from 95.11 per cent in 2002-03. While sub-standard assets were reduced to 0.51 per cent from 0.98 per cent during this period, the doubtful assets were brought down to 1.3 per cent from 3.79 per cent in 2002-03.

"Even after adoption of 90-day norm, we ensured that the slippage ratio was brought down considerably, apart from significantly improving the provision coverage. The slippage ratio was brought down to 0.88 per cent during last fiscal from 3.38 per cent in 2000-01. During this period, we could improve the provision coverage to 87.2 per cent from 52.92 per cent," Mr Mukherjee said.

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