India’s second-largest public sector lender, Punjab National Bank (PNB), hopes to recover non-performing assets worth Rs.20,000 crore in the current financial year. The bank aims to perform this recovery through one-time settlements and the guidelines provided under the Insolvency and Bankruptcy Code (IBC). This recovery target is about 25% higher than the Rs.16,000 crore worth of bad loans recovered in the previous financial year.
The bank has increased its recovery targets as losses continue to grow due to higher provisioning for bad loans. PNB has reported a net loss of Rs.4,750 crore for the fourth quarter of the previous financial year. This loss has been attributed to the provisioning made by the bank to balance its bad loan portfolio. During this quarter, the bank increased its bad loan provisions to Rs.9,154 crore.
Some of the major accounts like Essar Steel are expected to bring in a significant amount of recoveries during the upcoming financial year. Bhushan Power & Steel and Essar Steel are expected to bring a total of Rs.6,000 crore for the bank.
At the end of the March quarter, PNB has reported that its overall non-performing assets stood at Rs.78,472 crore. This staggering increase in bad loans has made the bank increase its provisioning every year to compensate for the losses. The bank is increasing its recovery efforts as the process under the IBC has been slow over the last few quarters.
In addition to IBC, PNB is also focusing on bad loan recoveries through one-time settlements and Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI). The bank has revealed that one-time settlements can be used for over 2.25 lakh of its stressed accounts.
Apart from bad loan recoveries, the bank is also focusing on generating funds through various other measures. The bank expects to generate Rs.1,000 crore by selling some of its non-core assets like its old office building in Delhi. PNB also hopes to generate additional funds from the market during the second half of the current financial year.
Source: Economic Times