Money & Banking

New tracking system could push up NPAs this quarter: Vijaya Bank

Anjana Chandramouly Bangalore | Updated on March 29, 2011

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Migration to the non-performing asset (NPA) tracking system could increase gross NPAs for Vijaya Bank during the current quarter. But things will be better from the next quarter onwards, said a top official of the bank.

“As of December 2010, our gross NPAs were 2.46 per cent, which has been coming down steadily since June. Whether it will remain less than this during the current quarter, we are not sure,” Mr Albert Tauro, Chairman and Managing Director, Vijaya Bank, told Business Line. Almost 90 per cent of the bank's assets are now tracked through the NPA-tracking system, and “that could bring in a little bit of additional flow,” he said.

Though the sustained reduction in gross NPAs “may not happen for the current quarter”, things will be far better next quarter, he indicated. According to him, there is “no devil in the details”.

Till the Government directed all banks to move into the system-driven NPA tracking mode by March-end this year, Vijaya Bank was monitoring its asset quality manually first, and then through offline compilation. Now, NPA-tracking is done through a patch or as an add-on tool with the core banking solution. Vijaya Bank's system for NPA-tracking is nearly ready, but for issues such as some inaccuracies in data integrity which remain to be sorted out, said Mr Tauro.

“If I provide for those marginal aberrations of about 10 per cent, we have no problems moving to system-driven NPA tracking. But we would like this also to be completed,” he explained. The bank might seek some time from the Government to set these inaccuracies right.

On credit off-take for the next fiscal, Mr Tauro said that a 20-22 per cent growth should be comfortable. He admitted credit growth was a little subdued this fiscal as the bank faced a shortfall immediately after the base rate implementation. “That has evened out now, and we expect a steady growth of 20-22 per cent on the asset side,” he said. This fiscal, the bank expects a credit growth of 16-18 per cent.

Business target

Though the bank had originally set a business target of Rs 1.26 lakh crore for this fiscal, Mr Tauro said that due to sluggish growth and the loss of advances of Rs 7,000 crore to banks with a lower base rate, “we scaled down our total business to a little over Rs 1.2 lakh crore — Rs 70,000-crore deposits and Rs 50,000-crore advances”. He added that the bank will be able to achieve the scaled-down target this year.

Published on March 29, 2011

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