In addition to reduced slippages, BoB will also look to improve its quarterly recovery rate, which has remained at around Rs 4,000 crore a quarter for the last few quarters.
Bank of Baroda (BoB) expects slippages (fresh accretion of bad loans) to decline from the fourth quarter. The bank ratcheted up slippages of Rs 10,387 crore during the December quarter, against the average of Rs 6,000 crore it reported in previous quarters. In an interview with FE, managing director and chief executive Sanjiv Chadha said, “Slippages have been around Rs 6,000 crore each quarter and they have been a little higher this quarter because of the divergence issue. Based on my understanding, the slippage ratio from this quarter onwards should trend downwards.”
In addition to reduced slippages, BoB will also look to improve its quarterly recovery rate, which has remained at around Rs 4,000 crore a quarter for the last few quarters. For this, it may resort to referring a few accounts for resolution through the insolvency route. Chadha explained that BoB has not had any chunky recoveries from cases in the National Company Law Tribunal (NCLT), unlike other banks who benefited from court-monitored resolutions in some large exposures. The bank had sold off its exposure to Essar Steel to Hong Kong-based SC Lowy in 2018. “In the case of BoB, there are not too many large exposures which are there in the NCLT and to that extent, the upside has been capped. The fact that we don’t have too many existing exposures doesn’t preclude the fact of new references (to NCLT),” Chadha said. —FE