IDBI Bank wants its managers — at the zonal, regional and branch levels — to focus their energies on making recoveries from the top 20 bad loan accounts in their jurisdiction.
What this means is that the bank does not want its officials to spread themselves too thin by seeking to make recovery from all bad loan accounts at the same time.
To clean up its books, the public sector bank has launched a special ‘Own Your NPA’ (non-performing asset) campaign so that officials give it all they’ve got for faster resolution of bad debts.
According to IDBI Bank Chairman and Managing Director M.S. Raghavan, as part of the campaign, each zonal, regional and branch manager will personally go and meet the customers.
“Hitherto, the focus (recovery) was missing. So, now the focus has returned. It is not 200 accounts but the top 20 (bad loan) accounts that are getting attacked time and again,” he said.
The total number of cases identified under the campaign, which was launched on August 1 and runs up to December 31, is 1522, involving an aggregate principal outstanding of Rs 5,805 crore.
Through the campaign, the bank is trying to settle some 73 per cent of its total NPAs of Rs 7,959 crore as on June-end 2013.
Raghavan said the managers have been told that their achievements on the recovery front under the campaign will be an important factor in their overall performance appraisal.
“We said that ideally these accounts should be closed. However, we all know this is not possible. In any case, there should be substantial progress on the recovery front,” said the IDBI Bank chief.
Year-on-year, IDBI Bank has seen a 45 per cent increase in NPAs, from Rs 5,496 crore as at June-end 2012 to Rs 7,959 crore as at June-end 2013.
Raghavan observed that in any bank’s loan portfolio, about 1 per cent is the normal stress that is built up due to various reasons, including business failure.
But what is more important is the stress arising from external factors, such as slowdown in the economy.
So, the stress from external factors is one major factor that has affected the asset quality of all major banks. This will get minimised only if the economy makes a turnaround.
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