Canara plays down Dabhol exposure impact

Canara Bank's Rs 335 crore exposure to the controversial 2,184 MW two-phased Dhabol power project is not a cause for concern, according to chairman and managing director, R V Shastri.

"We are not unduly concerned about our exposure to the project. The bank has given Rs 35 crore to phase-I of the power project and Rs 300 crore to phase-II," said Shastri.

In the last three years, Canara Bank has not booked any income on phase-II. Further it has not yet been classified as a non-performing asset. Phase-I has already been classified as an NPA by IDBI, SBI and ICICI Bank.

"A view is being taken on the project at the industry-level. The bank will not have any problems in making provisions for its Dhabol exposure at any time," he said at an analysts meet.

Shastri said the bank is seeking to achieve the investment fluctuation reserve (IFR) target of 5 per cent of its total investment portfolio in two years. Currently, the bank's IFR stands at 2.25 per cent of the investment portfolio of Rs 35,000 crore.

"We don't touch family silver (high coupon gilts). Almost 75 per cent of our investment income comes from churning our portfolio while the balance is from sale of investments," he said.

The bank will book an extraordinary income of Rs 127 crore, received from Stanchart after resolution of a 1992 securities scam case by the Supreme Court, in the third quarter.