The public sector Indian Overseas Bank (IOB) is taking a number of measures to reduce stranded debt to come out of the Reserve Bank’s immediate corrective action framework. The bank’s annual report for 2019-20 has stated that the one-time settlement strategy has benefited from the recovery of trapped debt.
Bank of Chennai reported a profit of Rs 144 crore for the quarter ended March 2020. Earlier, he had suffered for 18 consecutive quarters. IOB, which came under the Reserve Bank’s Immediate Corrective Action (PCA) framework, had earlier benefited in the quarter ended June 2016.
According to the IOB, during the last financial year 2019-20, the bank found the one-time settlement plan quite successful. According to the report, “The bank is making several efforts to reduce non-performing assets (NPAs) to come out of the purview of the PCA framework early.” However, the basic motive for recovery of trapped debt ie NPA is recovery of entire dues without affecting the profit.
The bank said that it had to use settlement settlement in addition to legal remedies for recovery of NPAs. Under this scheme, the bank has increased the rights of regional, divisional and central offices to resolve high value NPAs. The Bank said, “One Time Solution Scheme (OTS) has received good response at the regional level.
Around 69,200 NPA accounts worth Rs 3,400 crore have been settled under the OTS regime during FY 2019-20. ”In addition, the bank introduced an online version of OTS. Under this, borrowers can submit OTS applications online and are sent to the next level for disposal under special powers given for OTS approval.
AIOB said, “Though the ‘online OS’ has not yet picked up, there has been a beginning and we have asked the branches to give more information to NPA borrowers about it.” According to the bank, “The bank Under the SARFAESI Act (Securitization and Restructuring of Financial Assets and Enforcement of Securities Interest), a comprehensive scheme of e-auction was taken up for the assets taken over by March 2020.
The bank has put 3,167 properties for e-auction for July, 2019. “The report said,” 263 crores were received through the sale of 44 properties in FY 2019-20. With the introduction of e-auction under the SARFAESI Act, the OTS has become clear and NPA accounts have started closing. ”
With the commencement of operations under the SARFAESI Act, a settlement of Rs 695 crores involving 1,290 accounts. The IOB was able to bring gross NPA or implicated debt to 14.78 per cent of gross debt by March 2020 as compared to 21.97 per cent in the same period a year ago.
Net ANIA also declined from the level of 10.81 percent in March 2019 to 5.44 percent on March 30, 2020. Absolutely gross NPA stood at Rs 19,913 crore for the financial year ended March 30, compared to Rs 33,998 crore a year ago. At the same time, net NPA came down from Rs 14,368 crore to Rs 6,603 crore.
According to the IOB, the bank managed to bring down net NPAs below the limit set under the PCA framework on March 31, 2020. The bank did not make any appointment in FY 2019-20. The number of bank employees for the financial year ended March 2020 was 24,857.