Bank of India anticipates recovering Rs2,500 crore in bad loans every three months

11 Jul 2022 , 12:55 PM

In order to grow after years of stagnation, Bank of India (BoI) has set an ambitious quarterly recovery target of Rs2,500 crore for the current fiscal year. CEO AK Das stated that he intends to keep slippages at an average of Rs600 crore per quarter and anticipates double-digit growth in the loan book this year.

As of March 2022, the public sector bank reported gross non-performing assets (NPAs) at 9.98% of loans, down from 10.46% in the quarter ended in December. In March 2023, Das predicted that the bank’s NPA will be below 8 percent as a result of improved bad loan recoveries and controlled new slippages.

However, a significant portion of the bank’s recoveries are dependent on its proceedings before the National Company Law Tribunal (NCLT), which were Rs32,000 crore out of the bank’s gross NPAs of Rs45,000 crore are still pending. Additionally, the bank would sell Rs2400 crore in problematic loans to the recently established National Asset Reconstruction Co. (NARCL).

The Kishore Biyani-promoted Future Group, which owes lenders more than Rs25,000 crore, has BoI as its primary lender. It began insolvency procedures against the Future group in April, but the National Company Law Tribunal has not yet accepted them (NCLT). According to Das, the bank has fully compensated for its exposure to the Future Business after recognizing slippages of Rs600 crore from the group in the quarter ended June 2022.

For the bank, corporate demand has been subdued because just half of the Rs65,000 crore sanctioned funds have been used.

The bank’s board has approved raising Rs2500 crore in stock, but because the bank’s capital adequacy is currently at 17%, a decision to raise additional equity won’t be made until the end of September, according to Das.