Recovery of bad loans has become the first priority for Bank of India (BoI), as the lender has formed a separate recovery division so that non-performing assets on the book do not start aging and attract higher provisions, managing director and CEO Melwyn Rego told FE.
“Just looking at the size and number (NPA) it becomes priority number one and we need to attack it as early as possible. Otherwise, the aging process will start and so will the provisioning requirement,” Rego said.
Rego said by the end of September last year, he had realised that certain issues needed greater focus, and therefore drew up a three-pronged strategy around consolidation, reducing concentration risk and capital optimisation to build a strong balance sheet. “I have gone round the country around each national banking groups (NBGs) and elaborated on the strategy and why it should be followed,” he explained.
BoI has eight NBGs, and there are six zones under each NBG. Each zone is divided into hundred branches.
In the December quarter of FY16, the bank moved to a fully automated system of recognising NPAs. A special recovery vertical was set up and three general managers in the head office of the bank are in charge of the division. While, eight NBGs have equally been divided among the two, the third banker focuses on coordination for one-time settlements (OTS). “The bank has also digitised the process for monitoring of NPAs,” Rego said.
The bank has set itself a target of Rs 17,500 crore in recoveries and upgrades in FY17. In FY16, its recoveries and upgrades stood at Rs 10,921 crore. Gross NPA of the bank stood 13.07% in Q4FY 16, against 5.39% in the same quarter last year. Net NPA increased to 7.79% in the March quarter.
Every NPA, according to Rego, will be touched and an online report generated detailing which client was met, what was the outcome and possible resolutions. “This puts a check on the people concerned.”
Besides the three general managers, one deputy general manager at every NBG has been deputed exclusively for recovery and at the zonal level, one deputy zonal manager has been deputed for recovery. A branch manager is responsible for recoveries of loans up to Rs 10 lakh, zonal manager up to Rs 1 crore, NBG up to Rs 5 crore and all loans above Rs 5 crore would be recovered from the head office.
