Recoveries to improve; hope RBI cuts CRR, MSF: Syndicate Bk

Syndicate Bank saw improvement in recoveries to the tune of Rs 229 crore against Rs 128 crore in the previous quarter, says CMD SK Jain. The public sector lender is hopeful that the recovery figures will still be better going ahead due to steps taken by the bank to target recovery, he adds.

Speaking to CNBC-TV18 post results on Monday, Jain says that due to some five-six big accounts slipping during the quarter, there is an increase in the non-performing assets. The bank’s total slippage for Q2 was to the tune of Rs 1,700 crore from sectors including shipping, real estate and textile, he adds.

Meanwhile, Jain believes the Reserve Bank of India should reduce the cash reserve ratio and marginal standing facility in its second quarter monetary policy review on Tuesday.

Below is the verbatim transcript of SK Jain’s interview on CNBC-TV18

Q: What are your expectations from the Reserve Bank of India (RBI) policy?

A: There should be reduction in cash reserve ratio (CRR) so that there is some ease on the liquidity. We are also expecting some decline in the marginal standing facility (MSF) rate.

Q: Your asset quality this quarter has worsened in terms of your gross non-performing assets (NPA) rising 26 percent and net NPAs rising 45 percent. Can you just take us through the asset quality this quarter?

A: Some five-six big accounts have slipped during this quarter and that’s the basic reason for increase in NPA. In last quarter, there was substantial increase in smaller accounts, but during this quarter smaller account increase has reduced substantially with the focused attention given by staff people, but some four-five big accounts have fallen and that is the reason NPAs have increased. This is basically due to stress in the economy that these accounts are unable to maintain the quality.

Q: Can you quantify the total slippages this quarter then?

A: The total slippage during this quarter is to the tune of Rs 1,700 crore. I will not name the companies as such, but I can name you the sector, one is from shipping, one is from real estate, one is from textile, like this 3-4 sectors are there.

Q: Your restructured loans this time around have been quite subdued as compared to your slippages. What was your total restructured loan? Which were the restructured sectors that you have to restructure loans from?

A: Total restructure portfolio is around Rs 9,700 crore and during this quarter it is only to the tune of Rs 265 crore. The Rs 265 crore, are very small accounts. No major accounts have been restructured during this quarter, but going forward certain pipelines are there, major one is Andhra Pradesh discoms. That is one exposure in Syndicate Bank to the tune of almost Rs 2,100 crore.

The government has yet to decide on the restructuring of that account. Barring that, there is not much stress now on restructuring and going forward, I am sure that the pace of restructuring will definitely come down in the second and the third quarter.

Q: You did not see many upgrades and recoveries this quarter because that was what the street was working with that maybe your upgrades and recoveries would be higher?

A: During this quarter the recoveries are to the tune of Rs 229 crore vis-à-vis Rs 128 crore in the previous quarter. I told you in previous quarter that recovery will be better and it is better. We were trying to upgrade a few bigger accounts, but our efforts could not materialise.

Going forward on recovery front, we are very much hopeful that the recovery figures will be still better in the second and third quarters, because we have taken all steps to target our recovery and recently I had my regional managers' conference so I am hopeful that figures will improve going forward.