"By this month-end, we want to close the deal and come out of some of these problem accounts," executive director R Athmaram told CNBC-TV18's Sumaira Abidi and Reema Tendulkar.
In an effort to reduce stress on burgeoning bad asset book, Bank of Maharashtra is looking to sell Rs 520 crore NPAs. "By this month-end, we want to close the deal and come out of some of these problem accounts," executive director R Athmaram told CNBC-TV18's Sumaira Abidi and Reema Tendulkar.
Below is a verbatim transcript of the interview
Sumaira: Could you give us some more details on whether you have finalised the buyer of these NPAs? Are you looking to further sell anymore such assets?
A: In this tranche, we are planning to sell about 30 assets covering Rs 520 crore. The last date for submission of it is March 15. By this month-end, we want to close the deal and come out of some of these problem accounts. We expect all the participants to participate actively. They are covered by assets also. So, we hope that there will be good response from the companies.
Reema: If you are planning to invite bids by March 15, is it possible for you to close the entire sale by March 31? Will the money from this sale of NPAs show up in your Q4 or the entire process will take time and perhaps it will come through in the April-June quarter?
A: We are quite hopeful because it is a plain vanilla tender. Once they submit that tender, if the rates are acceptable to us, we shouldn’t take much time. We have very categorically mentioned in the tender that the buyer has to pay up by March 25. So we are targeting before March.
Sumaira: This time around your gross NPAs had gone up topping that 4 percent odd mark. So could you tell us how much of the pressure will now ease following the sale of some of your bad assets? Going forward, where do you think you could maintain it?
A: We are much better off than some of our peer group banks in the current situation. There are at least 8-9 banks whose gross NPA ratios are above 5 percent, we are at 4 percent. So we are working in an economy and my problems cannot be different from others. Only thing is we are relatively better off and we are running special recovery drive for the past one and a half months to two months. So we are expecting good recovery. The results so far are also somewhat encouraging.
Last one month normally will be very crucial for recoveries. So we have also given a serious message to the field that a recovery should be given top priority. So this March month is going to be very crucial and I am very confident that we will show much better results by March.
Reema: Any more assets, which the company is likely to sell perhaps in the next—not just in this quarter discussed—in the coming few quarters?
A: In September, we attempted once, we were not quite successful. That had to be abandoned. This is the second time in the recent past, we are trying. Now based on the learnings, we have from this sale, will surely do something in Q1 of 2014-2015. We are waiting for the responses for the tender.
Reema: You also have exposure to the Maharashtra distribution companies (DISCOMs). There has been a lot of newsflow. If you can provide some more colour with respect to loans?
A: As far as the electricity board exposure in Maharashtra is concerned, we have no problem. The accounts are conducted satisfactorily. We have problems outside in Rajasthan and other places. So Maharashtra is not a big issue for us.
Reema: In the previous quarter, your slippages went up a fair bit. In this quarter, in Q4 first two months had done January and March, how has been the picture in slippages and do you think the Q4 slippages will be more or less than what we saw in the previous months as well as on the restructured assets?
A: There could be some slippages. We cannot crystallizing to numbers at this space because March being a very crucial quarter. The efforts by all the participants will also be higher in March. So some of the cases, which are likely to be approved in corporate debt restructuring (CDR), they will come out of the NPA problem. So we are keeping the fingers crossed.