Dena Bank to recover Rs 300 cr NPAs this FY

Dena Bank plans to reduce its gross non-performing assets (NPAs) from Rs 1,484 crore in March this year to Rs 1,100 crore by March 2005 mainly through cash recoveries and upgradation of accounts.

The bank has planned to effect cash recovery of Rs 300 crore in the NPA accounts during the current financial year.

The bank plans to bring down the ratio of net NPAs to net advances to below five per cent by March 31, 2005, from 9.40 per cent in March this year.

"The Securitisation Act is definitely a boon for banks in recovering NPAs since it places the borrower under pressure. The bank will use the Securitisation Act in selected cases to take possession of the assets," Anil K Khandelwal, chairman and managing director, Dena Bank, said.

The bank plans to increase deposits by about 20 per cent to reach Rs 22,000 crore by the end of the current financial year.

The bank has projected a growth of about 20 per cent in advances to Rs 12,000 crore by the end of March, 2005.

"After the order of the Supreme Court on April 8, bankers are required to give due cognition to the objections raised by borrowers and the reasons for not accepting the objections are required to be communicated to the borrower. Thereafter the bank can take possession and enforce the sale of the assets unless restricted by the orders of the court or debt recovery tribunal. The Securitisation Act puts tremendous pressure on the borrower for payment of bank's dues. The act will be effective for recovery of medium-sized loans," said Khandelwal.

The government of India holds 70.99 per cent in the bank, while banks, financial institutions and insurance companies hold 7.40 per cent. The balance 21.61 per cent shares are held by retail investors.

As on March 31 this year, the capital adequacy ratio of the bank was 9.48 per cent against the requirement of 9 per cent prescribed by the Reserve Bank of India.

The bank aims at a business growth of 20 per cent during 2004-05. Priority sector advances constitute 44.64 per cent of the bank's net credit against the requirement of 40 per cent prescribed by the RBI.

During the financial year 2004-05, the bank plans to open around 15 branches at various potential centers across the country. The bank proposes to introduce centralised core banking system during the current financial year.