Shares of Bank of India rose the most in nearly five months after the state-run lender said it has recovered Rs 7,000 crore bad loans in the last two months.
The bank has recovered this amount in the last two months and expects to recover the balance of Rs 2,000 crore in another two months, Dinabandhu Mohapatra, managing director and chief executive officer told BloombergQuint. This will substantially improve the lender’s balance sheet, Executive Director N Damodharan told reporters earlier.
The provision coverage is adequate at 65 percent, Damodaran said, adding “our endeavour is to bring net non-performing assets from around 6.7 percent at present to less than 6 percent”.
The lender embarked on a recovery plan after the Reserve Bank of India, in December last year, had initiated prompt corrective action against it, citing high net NPAs, insufficient capital and a negative return on asset for two consecutive years
The RBI had also said the bank had under-reported gross bad loans worth Rs 14,057 crore and net NPA amounting to Rs 9,707 crore for financial year 2016-17. The state-owned lender had then said that part of the divergence was on account of the standby letter of credit issued by other banks.
The banks, which issued the SLBCs, will now have funded exposure to the companies involved, Mohapatra said. “None of the accounts are fraudulent in nature.”
(With inputs from PTI)