Punjab & Sind Bank, in a novel move to tackle loan defaulters, has started impounding the passports of the promoters of defaulting companies besides filing civil and criminal suits.
The bank is also setting up recovery camps in all zones for faster dismissal of pending cases of non-performing assets (NPAs). The net NPAs of the bank as on March 31, 2001, was 12 per cent. In absolute terms, it was to the tune of Rs 1,026 crore.
N S Gujaral, chairman and managing director (CMD), Punjab & Sind Bank, said, "The focus of the bank is now on recovery of NPAs. We are impounding the passports of some of the promoters of the defaulting companies. The bank is initiating action on all sticky accounts above Rs 4-5 crore. Civil suits apart, we are also filing criminal suits. There is not a single sticky account for which a suit has not been filed."
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At the recovery camps, the bank invites top management teams from the borrowers to attend meetings with senior management of the bank consisting of general managers, zonal managers and branch managers.
These camps are meant to settle the accounts on the spot outside the purview of courts. The bank has been able to reduce its NPAs by around Rs 200 crore this year compared with Rs 70 crore the previous year, Gujaral said.
The recovery camps are set up in those zones where the number of NPA accounts are large. The zonal officers who handle the sticky cases report directly to the CMD's office on a daily basis.
Despite the aggressive recovery drive, there has been a slippage in the NPAs of around Rs 350 crore during this fiscal and this will raise the net NPAs to over 13 per cent.
"Most of these accounts are old and they have gone bad because of the downturn in the industry. However, we will do heavy provisioning during the year," said Gujaral.
The bank is also focusing on retail accounts. Over the last one year, it has opened more than one lakh retail accounts which has helped the bank lower the cost of deposits from 7.91 per cent in March 31, 2001, to around 7.65 per cent now.
"We will focus on retail lending such as housing loans, agriculture and personal loans for salaried people," said Gujaral.