As NPAs jump, Exim Bank turns cautious on loan book growth

With its gross non-performing assets (NPAs) crossing over 9 per cent in FY17, Export-Import Bank of India (Exim Bank) is looking to grow its loan book cautiously.

According to Debasish Mallick, Deputy Managing Director, Exim Bank, the lender might witness about 9-10 per cent growth in advances and guarantees this fiscal. In FY17, its total advances and guarantees stood at about ₹1,15,000 crore.

“Our advances could grow to about ₹1,20,000-1,25,000 crore by the end of this fiscal. We are not looking at an aggressive growth in advances as we have turned very cautious about the quality of asset,” Mallick told BusinessLine .

During the year ended March 31, 2017, the bank’s gross NPAs increased to 9.24 per cent, as compared to 4.17 per cent in the same period in FY16. Net NPAs were at 4.68 per cent (0.86 per cent).

“The rise in NPAs was largely on account of a problem in the industrial cycle. Though this year we might see the gross NPAs hovering around 9.5 per cent, we should be able to bring them down to 5-6 per cent levels in the near future,” he said.

Metals, oil and gas, textiles and pharmaceuticals among others were some of the key contributors to the rise in NPAs.

The bank’s provision coverage ratio was at 56 per cent in FY17. The aim is to improve the coverage ratio to 70 per cent in the next four-five years, he said.

Project export, including buyer’s credit, overseas investment finance and project finance will be the key focus areas for the bank this year, he said.

Currently lines of credit account for nearly 35 per cent of its advances, while the remaining 65 per cent comes from other avenues, including project export (which includes buyer’s credit), overseas investment finance and project finance.

According to Mallick, India is becoming increasingly relevant and competitive in the manufacturing of complex engineering services. Indian companies are doing excellent work in the construction space in areas such as waterworks, roads, railways and other complex project execution, he pointed out.

“What we are finding on our desk today is India-based EPC companies executing complex engineering and manufacturing projects overseas and they need financial support. We are looking to tap this opportunity,” he said.

Exim Bank has extended nearly $450-million finance support for a railway project in Ghana to be executed by Afcons Infrastructure Ltd. It has also extended $300 million (to be disbursed over a period of time) to Suzlon for implementation of a wind-mill project in the US.

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