Aim to reduce gross NPA to 15% by September 2016: IOB

Indian Overseas Bank (IOB) is targeting reducing its gross non-performing assets (GNPA) considerably to 15 percent by September 2016, said Atul Agarwal, ED, IOB. This, he expects to do so by disposing non-performing assets (NPAs) to asset restructuring companies (ARCs).The bank's slippages in the June quarters stood at Rs 5,330 crore and the restructured book at Rs 14,000 crore, he said, adding, no account has slipped as parties had requested movement under Scheme for Sustainable Structuring of Stressed Assets (S4A) and 5:25. Below is the verbatim transcript of Atul Agarwal’s interview to Reema Tendulkar & Nigel D'Souza on CNBC-TV18.Nigel: Let us focus on the movement of your gross non-performing assets (NPAs) first. Could you tell us what were the slippage numbers for the past quarter? Also, what were the recoveries?A: Our gross NPAs as of June 16 stood at Rs 33,913 and the reduction in the NPA was Rs 1,465 crore. It was on account of cash recovery of Rs 458 crore, an upgradation of Rs 346 crore and write-off of Rs 409 crore, beside the sale to asset reconstruction companies (ARC) of Rs 253 crore.Reema: What were the gross slippages this quarter? In the prior quarter it was Rs 9,323 crore.A: This quarter is Rs 5,330 crore. Reema; It has come down by nearly Rs 4,000 crore on a quarter-on-quarter (QoQ) basis?A: Yes.Reema: What is the current figure for the restructured book?A: That is about Rs 14,000 crore.Nigel: Out of the restructured books, what was the slippage number over there?A: I don't think any account has slipped because the parties have requested for under Scheme for Sustainable Structuring of Stressed Assets (S4A) and under 5:25. Nigel: In the last quarter, what was the number that was added to 5:25? Was there anything added to strategic debt restructuring (SDR) as well?A: Nothing has been added there and I don’t have the figures right now. Nigel: Do you have the total numbers at least, what is currently under SDR as well as 5:25?A: No, I am not carrying that data with me.Reema: With the slippages coming down, your restructured book is also looking healthier on a quarter-on-quarter (QoQ) basis. Do you believe your gross NPA ratio which currently stands at 20.48 will come down and if yes, by how much? What is Indian Overseas Bank (IOB's) guidance by the end of FY17, where should the gross NPAs and net NPAs stand at?A: Owing to the strategies as discussed in the board yesterday, we expect that the gross NPA trigger would be around 15 percent by September. We have certain things in minds and the gross NPAs will reduce considerably. Nigel: You are sounding confident on that front. You told us your sale to ARC was around Rs 250 crore did I get that number right for the past quarter?A: Rs 253 crore. Nigel: What is the total outstanding security deposit?A: That is 85 percent thereabout. Nigel: So, what would be the total number the absolute number?A: That is about Rs 3,000 crore. Nigel: You gave us some guidance in terms of your asset quality. We saw deposits as well as advances both of them declined. Could you tell us going ahead if we can see the book grow because there was a decline on both fronts?A: Yes, definitely we are concentrating of A rated borrowers so that our capital risk weight also comes down and we improve our capital adequacy ratio. We have very good liquidity as well.Reema: Let me come back to your gross NPA guidance of hitting 15 percent by the September quarter. What gives you confidence in that guidance what is the expected slippages, the up gradations recovery that you foresee in this quarter which we can arrive is this figure?A: This is because we have decided, we have taken a conscious decision that we would dispose of the assets by sale to ARC and therefore we would not be required to do the additional 18 provision for the NPA. Besides that whatever provision we are having part of it would be reversed and would be in our profit and loss (P&L) now.Reema: What could be the quantum of assets that you would dispose to ARCs this quarter?A: We will work it out but we are expecting to be in the range of about 15 percent of gross NPA.