Amidst the Covid-19 crisis, Canara Bank has set an ambitious target of ₹10,000 crore recovery this fiscal year. LV Prabhakar, MD & CEO, Canara Bank, spoke to BusinessLine as to how the bank is handling its NPA borrowers amidst the pandemic and the measures it has taken to recover dues. Excerpts:

What is the scene on Bank’s NPA at the end of Q1?

Our officers have contacted the NPA borrowers and also took the initiative of motivating the borrowers, wherever feasible, to mobilise their accounts for one time settlement (OTS) proposals and handled the accounts accordingly. During the first quarter, we were able to recover cash close to ₹1,440 crore and an up-gradation of ₹620 crore. Apart from this, the bank was able to recover ₹259 crore from the return of assets. Because of these efforts, the bank’s gross NPA has come down to 8.84 per cent by 144 basis points y-o-y and net NPA has come down to 3.95 per cent with a reduction of 192 basis points y-o-y. To have a cushion, the provision coverage ratio has also increased by 1,020 basis points to 78.95 per cent.

Which are the sectors that contribute the most to bad loans/ restructured accounts?

When it comes to bad loans, they are not restricted to any particular sector. However, we feel that there will be slippages in the accounts which are kept on hold. We think that about 25-30 per cent of these accounts may slip to NPA. As far as Canara Bank is concerned, we have ₹10,380 crore on hold for which we have made ₹1,038 crore of provision. Even if 25-30 per cent slips into NPA out of this stock, we have to make a provision of about ₹500-600 crore where we have already made a provision of ₹1,038 crore. I feel that we will be in a better position to handle these slippages.

How is the bank handling NPA pile-up? Are you conducting special recovery drives, selling NPAs to ARCs, etc?

For handling of NPAs, Canara Bank is endured at ensuring focus on monitoring of regular accounts as well as focused following of NPA accounts including the return of accounts. As I already mentioned, we are utilising the services of the officers, who are working from home, to follow-up on these accounts apart from conducting special OTS camps, special sensitisation camps so that we can educate the borrowers to take the advantage of our bank’s restructuring schemes and very attractive OTS schemes. Other recovery measures will continue as we used to do in the earlier days.

In the wake of Covid-19, which sectors ask for restructuring requests?

In the wake of Covid-19, we have aggressively assisted our existing borrowers by providing them with credit facilities under the special scheme Canara Credit Support for Covid-19 affected people. We are also providing support to our borrowers under various available government schemes. I am happy to say that under the emergency credit line provided by the Central Government, we have disbursed more than ₹6,400 crore to about 3.8 lakh borrowers.

Are there more restructured accounts now turning into NPAs?

We expect that not many will be turning into NPA and only up to 25-30 per cent of the accounts which are on hold might be turning into NPA.

What is the target set by the bank to recover this fiscal?

We are targeting about ₹10,000 crore of recovery during the current financial year.

On credit off-take what is the scene? Are you seeing any green shoots if yes which sectors?

If you see the Q1 results, there is a growth of about 5 per cent in domestic credit whereas it is not negative in any of the sectors as far as Canara Bank is concerned. We are getting the proposals and are disbursing the credit facilities to various MSMEs, retail, agriculture, and corporate sectors. We are getting enquiries from infrastructure, food processing, etc.

Post-merger, is the bank going in for rationalization of branches?

Rationalisation of branches is a continuous process taking into consideration the viability of the branches. During amalgamation also, we will go for rationalisation wherever it is needed.

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