Reeling under the impact of the ageing sticky assets and consequent higher provisioning, the net loss of Indian Overseas Bank (IOB) widened to Rs2,253.64 crore for the second quarter of FY20, compared with a net loss of Rs 487.26 crore in the corresponding quarter last fiscal.
Total income declined 6% to Rs 5,024 crore, against Rs 5,348.35 crore. Provisions rose to Rs 2,996.04 crore during the quarter from Rs2,016.60 crore in the same quarter last year.
Karnam Sekar, MD & CEO, told journalists that increased provisioning resulted in widening of the loss though the bank was able contain fresh slippages in the second quarter.
The bank is focusing its efforts to come out of PCA by March 2020 by making prudential provisions. Accordingly, the bank provided proactively for the likely shortfall in securities for the existing NPAs amounting to Rs 1,081 crore. The bank has made required provisioning in advances in specific accounts so as to improve net NPA to bring it below 6%, he said.
The gross non performing asset (NPA) came down to Rs 28,673.95 crore, which as a percentage of gross advances was at 20%, compared with Rs37, 109.96 crore (24.73%) during the same period last year. Net NPA also came down to Rs 12,507.97 crore (9.84%) as compared to Rs18,876.05 crore (14.34%). The provision coverage ratio stood at 75.85%. Total cash recovery for September 2019 was `727.96 crore, against `637.05 crore in June 2019.
"The net NPA has come down to single digit, that is at 9.84% in Q2. Our aim is to bring down the net NPA percentage to 6% by the December quarter, for which we would be required to reduce at least `4,500 crore in one quarter. For this, the bank will be adopting three-pronged strategy, such as increased one-time settlement (OTS) of dues, e-auctioining of pledged properties of defaulted borrowers and sale of debts through asset reconstruction companies," he said.
Sekar said the bank had recently got approval to widen the scope of OTS cases by enhancing the limit from Rs 3 crore to Rs 25 crore.