Rating agency S&P has lowered the standalone credit profile rating of Bank of India to BB+ from BBB-. Executive Director BP Sharma says the bank will be working on preventing relatively smaller loans from turning into bad loans.
He says, “Instead of concentrating on big ticketing advances which have been classified as NPA, we have a large number of accounts where the outstanding is quite low where resolving the account is much easier. So, this quarter we have picked up- accounts where outstanding is up to Rs 10 lakh, we have a portfolio of around Rs 3,000 crore. This is what we are eying to resolve this quarter.”
Below is the transcript of BP Sharma’s interview with Latha Venkatesh and Ekta Batra on CNBC-TV18.
Latha: Will this make life difficult in the sense that will you have to pay more for your certificate of deposit (CDs) or for any of the instruments through which you raise money?
A: Let me start with a small clarification. There has been no down gradation so far as overall rating is concerned or the outlook is concerned. This down gradation may have little bit impact on subordinate bonds, but if you see our capital adequacy, we are quite comfortable. We do not have a compulsion per se as on date to raise further subordinated debts but yes going ahead if we raise it, it may have little bit impact on the pricing front.
Latha: The S&P note said that for the next 12 months they see problem on your assets. It is possible that therefore they will not change the rating at least for the next 12 months; you won’t need subordinated debt for the next 12 months?
A: That is what I told you, as on 31 March, our capital adequacy position is comfortable. We are not looking at growth which calls for higher capital; we will be concentrating on that kind of credit which attracts lower capital.
Ekta: So you are not raising any funds in FY16 from the markets?
A: No such plan as on date.
Ekta: What is your sense in terms of your stressed asset formation because it had touched a record high in the previous quarter and you have sold Rs 900 crore to asset reconstruction companies as well. What can we expect in this fiscal from here?
A: These two developments is the biggest challenge which we are confronting now, no doubt about that. Our delinquency rate has gone up this March over last March but then it is just like an ECG graph.
Now, going ahead our entire concentration is to prevent further slippage and to resolve non-performing asset (NPA) accounts- here we are changing our strategy little bit, instead of concentrating on big ticketing advances which have been classified as NPA, we have a large number of accounts where the outstanding is quite low where resolving account is much easier. So, this quarter we have picked up- accounts where outstanding is up to Rs 10 lakh, we have a portfolio of around Rs 3,000 crore. This is what we are eying to resolve this quarter.
Ekta: Can you break up what your slippages were in the previous quarter on your fresh restructuring and from your slippages, how much was from infrastructure and how much from other sectors?
A: Out of 4,000 slippage in restructure, this quarter itself was about 50 percent.
Latha: And your fresh slippages were how much in fourth quarter?
A: Fourth quarter the slippages was about Rs 8,000 crore.
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