Dhanlaxmi Bank is confident of improving its non-performing asset ratios in the current financial year even as the uncertain macro-economic environment threatens to deteriorate the credit quality of many of its rivals.
The private lender aims to cut its gross non-performing asset ratio to 2.5% and net bad loan ratio to 1.5% by the end of March 2014. This would translate into 232 basis points and 186 basis points improvement in gross and net bad loan ratios, respectively on a year-on-year basis.
"The non-performing assets were mostly from the advances sanctioned during the previous two to three years. Some of the corporate advances sanctioned during the period became non-performing, which resulted in spike in the bad loan ratio. We have stepped up our recovery efforts and are confident of recovering 70% of the existing non-performing assets. We have properties as collateral against these loans and we will sell them to recover our dues," PG Jayakumar, managing director and chief executive officer of Dhanlaxmi Bank, told Business Standard.
"The situation is very much under control. There is no unusual spike in non-performing assets in our gold and mortgage portfolios. Rather, the bank perceives gold and mortgage as better portfolios in view of availability of good and easily marketable collateral, which could be recovered easily in case of default," he added.
The bank also aims to grow its advances by 20% in the current financial year, which will also help it in trimming bad loan ratios.
In 2012-13, the bank's advances declined by 9.9% due to its conscious decision to shed un-remunerative businesses and halt inorganic growth of credit portfolio. The bank now aims to focus on SME (small and medium enterprises), retail including gold loans, agriculture and micro-credit segments to reduce concentration risk and improve its profitability.
Jayakumar also dismissed reports that the appointment of Manoranjan Dash, general manager of the Reserve Bank of India (RBI), on Dhanlaxmi Bank's board was due to rise in non-performing assets of the bank. Dash has been appointed as an additional director in the bank for a period of two years with effect from May 23, 2013.
"The appointment has nothing to do with non-performing assets. It is not a new measure taken by RBI but only a replacement of Rohit Jain who was the central bank's observer on the board of the bank. There has been representation of RBI on the board of Dhanlaxmi Bank for quite a long time," he said.
The private lender aims to cut its gross non-performing asset ratio to 2.5% and net bad loan ratio to 1.5% by the end of March 2014. This would translate into 232 basis points and 186 basis points improvement in gross and net bad loan ratios, respectively on a year-on-year basis.
"The non-performing assets were mostly from the advances sanctioned during the previous two to three years. Some of the corporate advances sanctioned during the period became non-performing, which resulted in spike in the bad loan ratio. We have stepped up our recovery efforts and are confident of recovering 70% of the existing non-performing assets. We have properties as collateral against these loans and we will sell them to recover our dues," PG Jayakumar, managing director and chief executive officer of Dhanlaxmi Bank, told Business Standard.
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The private lender has formed dedicated teams at regional, zonal and corporate office level for managing bad loans. Jayakumar said that he was not alarmed by the current non-performing asset position of Dhanlaxmi Bank as the recent spike in bad loans is visible across the industry.
"The situation is very much under control. There is no unusual spike in non-performing assets in our gold and mortgage portfolios. Rather, the bank perceives gold and mortgage as better portfolios in view of availability of good and easily marketable collateral, which could be recovered easily in case of default," he added.
The bank also aims to grow its advances by 20% in the current financial year, which will also help it in trimming bad loan ratios.
In 2012-13, the bank's advances declined by 9.9% due to its conscious decision to shed un-remunerative businesses and halt inorganic growth of credit portfolio. The bank now aims to focus on SME (small and medium enterprises), retail including gold loans, agriculture and micro-credit segments to reduce concentration risk and improve its profitability.
Jayakumar also dismissed reports that the appointment of Manoranjan Dash, general manager of the Reserve Bank of India (RBI), on Dhanlaxmi Bank's board was due to rise in non-performing assets of the bank. Dash has been appointed as an additional director in the bank for a period of two years with effect from May 23, 2013.
"The appointment has nothing to do with non-performing assets. It is not a new measure taken by RBI but only a replacement of Rohit Jain who was the central bank's observer on the board of the bank. There has been representation of RBI on the board of Dhanlaxmi Bank for quite a long time," he said.