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Bank of Maharashtra is planning to sell close to Rs 500 crore worth bad loans to asset reconstruction companies (ARCs) in the second quarter (ending September 30, 2015), Sushil Muhnot, Chairman and Managing Director of the bank, said here on Wednesday.
This first tranche of Rs 500 crore is expected to be put on the block in September.
According to him, the bank is targeting a sale of another Rs 1,000-1,500 crore of non performing assets (NPAs) by the end of this fiscal.
“Depending on the success of the sale of this first tranche, we will take a call on the additional amount of NPAs to be sold,” he told reporters on the sidelines of the FICCI Banking Conclave.
New Model
According to Muhnot, the bank is also looking at a new incentive scheme for the ARCs.
Under the scheme it will pass on the additional benefits to these companies if they are able to make faster recoveries. This new scheme will be put to test during the bidding process when the first tranche of NPAs will be put on the block.
Headquartered out of Pune, the Bank of Maharashtra had sold NPAs worth Rs 200-250 crore last fiscal (2014-15). However, it did not sell any bad loans in the first quarter of this fiscal.
Gross NPAs in the first quarter of 2015-16 stood at Rs 7,574.86 crore; while fresh slippages during the period was Rs 1,400 crore.
Capital Infusion
Meanwhile, the bank is expecting a capital infusion of Rs 394 crore from the Centre for 2015-16.
Asked about raising money from the market, Muhnot said: “Post the capital infusion our capital adequacy ration (CAR) will be 12 (per cent) and I don’t think there is any need to opt for market borrowings at this stage.” CAR for Q1 stood at 11.61 per cent.
Growth
While Bank of Maharashtra expects a 12 per cent overall growth in business in 2015-16 (total business last fiscal stood at Rs 221,000 crore); advances and deposits are expected to by 12 per cent and 15 per cent, respectively.
According to Muhnot, it will also look to have its own mobile wallet app in the coming days.
“The mobile wallet is in the process of development and it should be ready in the next three to six months. We are in discussion with the channel partners,” he added.
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