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Oriental Bank of Commerce expects to make recoveries of Rs 1,200 crore this year and has already drawn up an action plan, according to a top official of the bank.
“Last year, we declared NPAs of about Rs 1,200 crore, and also made hefty provisioning. NPAs are profit centres; so earlier the declaration, earlier will be the recoveries. And this year we want to focus on recovery,” Mr Nagesh Pydah, Chairman and Managing Director, Oriental Bank of Commerce, told Business Line .
The bank's gross NPA as on March 31, 2011, stood at Rs 1,920.58 crore or 1.98 per cent of its loans.
OBC has put all accounts up to Rs 10 lakh on an intensive scanner — a system driven NPA identification scanner that has seen an NPA accretion of Rs 275 crore to Rs 300 crore due to this adoption. The bank, which already has a provision-coverage ratio of over 77 per cent, plans to increase it to 80 per cent this year, he added.
Mr Pydah said that the bank was adequately capitalised to meet the credit requirements of the next two years. The bank expects a credit growth of 20-22 per cent and deposit growth of 19 per cent this fiscal.
“We have headroom to raise Rs 6,800 crore by way of tier-II capital. But with tier-I capital of 11.21 per cent now, we feel adequately capitalised to take care of 20 per cent year-on-year growth in the next two years,” he added.
The Government's holding in the bank stands at 58 per cent, after the capital infusion of Rs 1,740 crore in March this year.
On the RBI's recent credit policy, where it increased savings bank interest rate to 4 per cent, Mr Pydah said it was a forward-looking step, and would affect cost of funds for his bank by 10-12 basis points.
“If you have to mobilise savings bank, you have to incentivise the customers. And it is very easy to absorb,” he explained.
Though the recent rate hikes by the RBI has resulted in most banks increasing their lending rates by 50 basis points, he pointed out that deposit rates won't go up. He also expected liquidity to return back to the system in a phased manner post September.
Customer-centric STEPS
The bank is also in advanced stages of negotiation with Punjab National Bank for introducing co-branded credit-cards.
“This is an organic requirement which we want to fulfil without re-inventing the wheel. Though there are no targets, we expect to easily ramp up about two lakh cards,” said Mr Pydah.
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