Money & Banking

OBC keen to rein in non-performing assets

K. R. Srivats New Delhi | Updated on February 02, 2011

Mr Nagesh Pydah, CMD of Oriental Bank of Commerce.   -  Business Line

Oriental Bank of Commerce (OBC) aims to graduate to a level where it would only have “nil Net NPA,” its Chairman and Managing Director, Mr Nagesh Pydah, has said. The net non performing assets (NPA) as a percentage of advances stood at 0.91 per cent at end-December 2010.

“My strategy will be to attack my NPAs. OBC, at one time, was known to be the only bank with nil Net NPA. We want to get back to this position,” Mr Pydah told Business Line. Mr Pydah, who assumed charge as CMD of the bank on January 1, said that NPA management has, today, become a profit centre. “Yes, there may have been higher-than-expected slippage (this fiscal). I look at it positively. As long as I maintain my gross NPA at below 2 per cent and net NPA below 1 per cent, I should consider myself in the comfort zone,” he said.

From mid-2008 till date, total restructuring of accounts stood at about Rs 6,914 crore, and about Rs 562 crore has migrated into NPA. “This is not a concern as it only about 8 per cent that has skipped. The NPA is feedstock for recovery for next year,” Mr Pydah said.

As on end-December 2010, OBC's Gross NPA stood at Rs 1,764 crore, compared with Rs 1,288 crore in end-December 2009. Net NPA in end-December 2010 stood at Rs 816.09 crore (Rs 584.10 crore in end-December 2009). While Gross NPA as a percentage of advances stood at 1.94, net NPA was 0.91 as on end-December 2010.

“When we declare NPAs, it is not that our asset book is absolutely bad. It could be host of circumstances and technical reasons. These technical reasons...once they are addressed..perhaps there will be a rebound in my upgradation levels and also an improvement in my credit portfolio,” he said.

On capital raising plans, Mr Pydah maintained that the bank has not got any firm indications from the Government yet, on capital infusion. OBC had indicated to the Government that it would require capital to the tune of Rs 1,000 crores.

Tier-II capital

However, Mr Pydah added that there was enough headroom for the bank to raise Tier-II capital.

“Should the situation demand, and depending upon the growth of credit and requirement of additional capital, we will certainly consider raising Tier-II capital, for which we have headroom of Rs 5,500 crore,” he said.

Published on January 31, 2011

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