IDBI Bank’s net loss widened to ₹4,185 crore in the third quarter ended December 31, 2018, against ₹1,524 crore in the year-ago period, due to a jump in provisions towards bad loans.

Provisions towards bad loans jumped 40 per cent y-o-y to ₹5,075 crore against ₹3,637 crore in the year-ago quarter.

MD & CEO Rakesh Sharma expressed confidence that his bank will come out of the RBI’s Prompt Corrective Action (PCA) by September-end.

With the Life Insurance Corporation of India (LIC) infusing ₹21,624 crore during the current fiscal to pick up a 51 per cent stake, the bank has been able to step up loan-loss provisions.

Sharma sees his bank’s provision coverage ratio going up further to 80-85 per cent from 75.21 per cent now. This will help as, when recoveries happen, there will be some write-backs.

The bank’s management underscored that at 1.69 per cent, the slippage ratio was the lowest in several quarters.

“...On the capital front we have already come out of PCA; on the leveraging part also we have come out of PCA; now only net NPA is remaining. So, we are quite hopeful that within the next two to three quarters, in this area also we will be complying with norms,” said Sharma.

“In the interim period, the bank is expecting to move from PCA Risk Threshold III to Risk Threshold II by March-end 2019 and to Risk Threshold I by June 30, 2019. By September 30, 2019, we should be out of PCA.”

Net NPAs were higher at 16.69 per cent of net advances as at December-end 2018 against 16.02 per cent in the preceding quarter.

Tapping LIC

With the life insurance behemoth picking up a majority stake in IDBI Bank, the latter is looking at becoming a primary bank for LIC for extending banking services such as deposit and current account facilities, cash management services, and source accounts of LIC’s customers, employees, agents, etc.

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