Canara Bank Expects Lower Recoveries In September Quarter

Canara Bank expects cash recoveries to be lower in the three months to September than the June quarter due to pending resolutions of large cases from the first list of 12 stressed accounts referred to the National Company Law Tribunal.

The bank had seen cash recoveries of Rs 3,537 crore from the resolution of Bhushan Steel Ltd. and Electrosteel Steels Ltd. accounts in the June quarter. The resolution of these two accounts cushioned the impact of higher provisioning during the period.

“In this [September] quarter, there have been no recoveries even from the first list of NCLT accounts like Essar and Binani, which were expected. So, recoveries in this quarter would be from the smaller NPA accounts only,” Debashish Mukherjee, executive director at Canara Bank, told BloombergQuint over phone.

IL&FS Exposure

Canara Bank has an exposure of Rs 2,500 crore to IL&FS group, according to Mukherjee.

The exposure to IL&FS and its subsidiaries, however, is recognised as “standard” or “performing in the bank’s books” because the company hasn’t defaulted on any of Canara Bank’s loans.

IL&FS Financial Services has defaulted on loans worth Rs 440 crore between September 12 and September 26.

Bank’s Guidance

Canara Bank, while announcing its June quarter results, said it “will try to maintain the guidance for the ongoing financial year”. It expects slippages to not exceed Rs 2,000 crore in the July-September quarter and Rs 10,000 crore for the financial year ending March 2019.

Mukherjee clarified that the bank hasn’t stopped lending to non-banking financial companies amid reports of banks curtailing lending to them following liquidity concerns.

The lender is also looking to offload unquoted equity shares in 73 companies, according to its exchange notification last week.