State-owned Indian Overseas Bank’s (IOB) second-quarter net loss widened to ₹2,253.64 crore from ₹487.26 crore last year, due to higher provisions for bad loans.
The Chennai-headquartered bank had made a provision of ₹2,600 crore for bad debts in the second quarter.
Overall provisions increased to ₹2,996.04 crore in the second quarter from ₹2,016.6 crore in the same quarter last year.
IOB, which is under RBI’s Prompt Corrective Action (PCA) measure, said its gross non-performing assets (NPAs) stood at ₹28,673.95 crore at the end of the September quarter, compared to ₹37,109.96 crore in the same period last year.
“The percentage of net NPAs came down to 9.84% in the second quarter from 11.04% in the June quarter,” Karnam Sekar, Managing Director and Chief Executive Officer CEO, Indian Overseas Bank, said in a press conference.
PCA framework
He pointed out that the bank had to bring new NPAs down to 6% to meet one of the criteria to come out of PCA. This means the bank has to reduce the net NPA by ₹4,500 crore, which Mr. Sekar was confident of achieving in the next quarter through a slew of recovery measures.
He also said the other criterion of being profitable, to come out of PCA, would be achieved by March 2020.
