The Indian Overseas Bank (IOB) is on course to meet the current year's target for reducing non-performing assets (NPAs), according to S C Gupta, chairman and managing director.
The bank had aimed to reduce its NPAs by Rs 250 crore in 2001-02. Against this target, the bank, by means of asset upgradation, loan write off and cash recovery, has been able to bring its NPA down by Rs 140 crore in the nine months ending December 31, 2001.
With the bulk of the one time settlement repayment money expected to come in the last quarter, the bank may well achieve the targeted figures in NPA recovery, said Gupta.
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Gupta, who was here to inaugurate the regional office building of the bank, said the bank intends to cut down its net NPA to 6.50 percent and gross NPA to 11 per cent by end-March 2002 from 7.01 percent and 11.81 per cent, respectively in the previous year.
Meanwhile, in a rare show of solidarity, the IOB officers' Association (IOBOA) is lending support to the management's NPA reduction drive.
"The NPA recovery is an important aspect to improve profitability", said K V Acharya, general secretary of IOBOA.
Besides, the IOBOA office bearers have been holding awareness and training programmes at regional office level all over the country.
He said the association has already sensitised the bank staff about the need to reduce NPA in 12 cities including Bhubaneswar in past few months and intends to hold similar meetings in equal number of more cities, where regional office of IOB are located, by February 25 next.
The total NPA of the bank stood at Rs 1,568 crore, of which default by small borrowers with less than Rs five lakh outstanding amounts to nearly Rs 400 crore.
Small borrowers are the focus of recovery drive as wilful defaulters among them are comparatively less. Besides, the new guideline by the Reserve Bank of India (RBI) permitting banks to go for one time settlement by waiving interest on loans up to Rs 25,000, has improved the recovery prospect in case of small borrowers.
Stating that wilful default among large borrowers is rampant, Acharya said, the bank has to go for multi-pronged strategy including constant follow up, persuasion and legal action to improve recovery in this segment. He felt there was a need to give more teeth to the relevant laws to aid the banks' efforts in NPA recovery.