Punjab & Sind Bank seeks Rs 600 crore for recast

Punjab & Sind Bank has come up with an elaborate restructuring plan. The recast blueprint - spanning over two to three years "" was presented to the finance ministry earlier this week. It envisages a Rs 500-600 crore assistance from the government. A large part of this will be used for cleaning up the books and upgrading technology.

The bank intends to reduce its net non-performing assets (NPAs) as a percentage of advances to 2 per cent from the current level of 8 per cent over a period of three years.

Finance minister P Chidambaram had recently underscored the need for banks to bring down their NPAs to less than 2 per cent. Punjab & Sind Bank is one of the players in the banking sector with a very high NPA level.

It will shortly approach the Reserve Bank of India (RBI) for regulatory forbearance. It proposes to seek a eight to ten years time-frame to meet the provision for staff pension amounting to around Rs 400 crore. The bank employees have already agreed to receive increments due to them in installments over a period of two years.

R P Singh, chairman-cum-managing director of the bank, said the plan is to expand the balance sheet by 50 per cent by increasing lending.

The bank proposes to focus on agriculture and retail lending where the NPA levels are relatively low. A public issue over the next two years could also be on, Singh said.

The bank would be cautious in future lending with regards to its exposure to the corporate sector, said Singh.

It has commenced the process of recoveries by auctioning most of the real estate properties pledged with the bank. It will step up recoveries of NPAs either by utilising the Sarfaesi Act or moving the debt recovery tribunal by the end of June. "The bank proposed to use the proceeds of the public issue to meet the Basle II requirements," Singh said.

He added that the capital adequacy ratio of the bank was comfortable. For the year ended March 2004, the bank's CAR stood at 11.06 per cent. The bank's net NPAs to net advances stood at 9.62 per cent as on March 31, 2004.