Recovery of Rs 1000cr from agri NPAs seen in Q4: Andhra Bk

Our NPAs are slightly different from other banks NPA. More than 1.5 percent of these NPAs have come only because of the loan waiver scheme announced by Andhra and Telangana, which is getting sorted out. On Telangana side, it has sorted out to a large extent and on Andhra side it is getting sorted out. We will get more interest reversals and NPA reversals during this quarter. So that will bring down our NPAs to 5 percent at par with most of the banks in the industry and most of our NPAs again are only from NPA and power sector because all the power and infrastructure companies are from this state. The issues are getting sorted out there also, many of the companies are reviving the operations, there also there must be some improvement.

One more reason for our NPA being higher is our accounting practice. In all those cases where restructuring is done, wherever we give additional funding, the restructured accounts or NPA accounts, we continue to treat them as restructured and NPA accounts because in most of the bank balance sheet, incremental amount dispersed in these cases are not treated as NPA. If you knock it off, my NPA will come down by 0.6 percent again. So these are all the conservative practices, which are followed over a period, we continue to have it.

Again bank has not sold even a single loan to the asset reconstruction companies (ARCs) during the current quarter. The entire period, we have sold only one account of Rs 160 crore to all the NPAs retained in our portfolio unlike many others where the portfolios are sold and NPA position is improved. If you consider all these things, we are comparatively much better than most of the banks in the industry today.

Ekta: Wanted to come to the agricultural NPAs now. How much did you recover in the quarter gone by, how much do you have outstanding in terms of your agri NPAs and how much more can be recovered in this quarter?

Rajendran: We have recovered about Rs 500 crore during the last quarter and about Rs 1,500 crore is still outstanding in the books. We are confident of recovering about Rs 1,000 crore before March end. Rs 500 crore will take longer-term to recover.

Ekta: Your net interest margins (NIMs) have improved this quarter on a sequential basis to around 3.4 percent, can you tell us what the outlook on the NIMs would be as well as your guidance in terms of your fresh restructuring pipeline and maybe slippages on a quarterly basis that we can expect in Q4?

Rajendran: There is not much of a restructuring pipeline, basically our pipeline is very small and most of the accounts are already restructured. I am not anticipating any surprise during this quarter. There is no major slippage, which is expected during this quarter almost all the stress accounts are provided for and the existing accounts are doing reasonably well except one-two accounts.

Ekta: How much did you do in terms of slippages in the previous quarter?

Rajendran: Previous quarter, out of the restructured account about Rs 360 crore are slipped into NPA. Now almost Rs 2,900 crore of my restructured accounts are coming for repayments during the current year, moratorium period is over, so most of them are performing well at this point of time, one-two slippages are bound to be there, that will continue to be there, we will be in a position to absorb it.

The NIMs -- 3.43 may not be a sustainable one. During next three quarters, I may have a better NIMs because there is a lot of interest reversals happening along with agricultural loan recovery, when agricultural loans are recovered almost 30-40 percent of the loan portfolio is getting recreated to the account because interest reversal is huge in this amount. So the 3.43 may improve during the next quarter but over a period what we are targeting is only 3 percent NIMs.