The Punjab National Bank, the second-largest public sector lender, has received loan restructuring requests worth Rs 12,000 crore out of the 40,000 crore it anticipated due to stress from the pandemic of Covid-19 on businesses and individuals, the general manager of the Mallikarjuna bank says Rao.
Of the total restructuring requests, the restructuring sought for business loans was worth Rs 9,000 crore, and these were invoked as of December 31. The restructuring process will be completed in the current quarter, Rao said.
In August last year, the RBI announced a one-off restructuring for individual and corporate borrowers affected by the Covid-19 pandemic.
“The restructuring demands have not been as we expected,” said Rao.
One of the reasons is that retail borrowers took advantage of the moratorium and did not feel the need to restructure loans.
Rao said the PNB had kept its gross NPA (non-performing assets) ratio target below 14% and its net NPA at 5% by the end of March.
The bank did not classify any accounts as bad debt that was not an NPA as of August 31, 2020, based on the Supreme Court’s general ban on re-recognizing bad loans. However, the lender made a conditional allowance of Rs 2,520 crore for those accounts which were not classified as NPA. If the bank had classified these accounts as NPA, the lender’s gross NPA and net NPA ratios would have been 14.71% and 5.65%, respectively, PNB said in its October-December results announcement on Friday. .
“Although the challenge has been there for the third quarter, although the Supreme Court ruling is a barrier to (the) identification of the NPA, January appears to be much better in terms of collections,” he said. declared.
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“Pending Rs 8000 crores in cash recoveries”
Recoveries were better in January, Rao said, and the bank expects a cash recovery of Rs 3,800 crore thanks to Bhushan Power’s resolution. A “good recovery amount” is also expected from the DHFL resolution where the tender was concluded. These two accounts will help achieve the recovery goal.
“Besides the NCLT, the recovery has been ‘moderate’, he said.
Rao also said the bank owned a fair amount of real estate after its merger with Oriental Bank of Commerce and United Bank of India, and the bank expects to make Rs 500 crore by selling non-core assets by June. 2021.
Creating a bad bank will not require high capital to start with, Rao said. The bad bank will not be required to buy assets, and the assets will simply be transferred by the banks, an exercise that will not require a high capital.
The required capital would be in the order of 10 to 15 percent of the cash that will have to be returned to the banks. The rest will be in the form of security receipts
Creating a bad bank will help buyers acquire assets in one go when many banks are involved in a consortium, Rao said.
Bidders are currently having problems participating in bids from various banks in a consortium. Now bidders will be able to bid transparently for the assets and acquire them in full, he added.