Dena Bank plans to bring down gross NPA by ₹6,000 cr.

Karnam Sekar  

Dena Bank plans to bring down its gross non-performing asset (NPA) by between ₹5,000 crore and ₹6,000 crore by end-March, said a top official.

“Our gross NPAs are about ₹16,000 crore. The target is to bring it down to ₹10,000 crore by the end of March 2019,” said MD and CEO Karnam Sekar, addressing the media, after he met the bank’s branch managers in the city. He was appointed to the post last month.

The Centre had earlier announced its intention to merge Dena Bank, Vijaya Bank and Bank of Baroda to form the country’s second largest public sector bank.

Internal panel formed

“We have formed an internal committee to decide on an action plan. I understand the other two banks too have formed such committees. The three [CEOs] will meet next week.” Asked about a timeline for the merger, he said, “The others in the merger process have talked about 2-3 quarters. We are also comfortable with [that timeline].”

Commenting on Dena Bank’s NPAs, he said, “Some major accounts are now before the NCLT [National Company Law Tribunal] at an advanced stage in the process. We are also looking to sell some assets to asset reconstruction companies.”

Earlier in the week, he had indicated that the target for sale of assets to ARCs was ₹2,000 crore-₹3,000 crore. Asked if he had any targets for NPAs for the quarter ending December, he said, “We aim to reduce GNPAs by ₹3,000 crore by end-December. But both this quarter and the next together, we should be able to achieve the ₹5,000-₹6,000 crore goal.” Due to its large NPAs relative to its size, Dena Bank is under a prompt corrective action framework of the RBI, making it ineligible to lend.

“Our first priority is to bring down our NPAs from 22% to 15% by end-March 2019.” His next priority, he said, was to raise CASA deposits to 45% by March, 2019 from about 40% now.

Banks track deposits from current accounts and savings accounts as a percentage of total deposits, as they serve as a cheap source of funds. Mr. Sekar, who was earlier Deputy MD at SBI, said there were many lessons learnt during the merger of SBI with its subsidiaries, which could help smooth the process of the current three-way merger.

“Harmonising interest rates, harmonising loan policies, account transfers for common accounts are all areas we can work on.” He specified four areas of focus: “HR harmonisation, credit process, bank transactions and technology platforms.”

He added that infrastructure spending in the country had increased and with it, private sector investment could see a boost in the fiscal year 2019-20.“The macroeconomic scene looks optimistic. In three quarters from now, I expect projects to start coming up.”

Responding to a query on whether it was not the infrastructure and related sectors that had led to the NPA problem for banks, he said, “For projects that take 25-30 years, we ought not to expect the promoter to pay back loans within seven to eight years. I believe the banks now understand the opportunities in this sector.”

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Printable version | Jan 17, 2022 1:40:27 PM |

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