"Our efforts are that by September this year, our gross NPA should come down around 9.5% and net NPA below 5.5%, so that we are below 6%," said Rakesh Sharma, Managing Director and Chief Executive Officer, Canara Bank.
Talking on loan growth, he said the small and medium enterprises (SMEs) has grown by 10%, the direct housing has grown by almost 16% and vehicle loan has grown by 13%.
Watch: Expect loan growth of 10-12%, retail growth of 20-22% this year, says Canara Bank Edited Excerpts: First the breakup of your slippages figure. Can you tell us how much was because of the Reserve Bank of India's directive and how much of this is because of the divergence?
The slippages during the current quarter was Rs 13,242 crore. Mainly out of this, if we give the breakup of Rs 8,181 happened because of the RBI's instructions.
Because scheme for sustainable structuring of stressed assets (S4A) and strategic debt restructuring (SDR) was discontinued. So, as a result, those cases, which were under the protection of SDR and S4A, was classified as non-performing assets (NPA) and we have made adequate provision for that.
Then of course, during current quarter, there was that divergence which we had represented was Rs 769 crore and failure of SDR cases was Rs 825 crore. This makes Rs 9,775 crore and of course apart from that, some agriculture around Rs 80-90 crore slippages happened in agriculture. So, overall other were than Rs 2,500 crore something.
If you see this stress assets overall, there is not much change. The stress assets means the gross NPA plus standard restructured advance was 12.50 as on March 31, 2017, which has marginally increased to 12.76.
So, that means major part which has slipped is mainly from the restructured assets. So, stress assets is more or less continue to be same. In National Company Law Tribunal (NCLT) cases, in the first list we are there in 12 cases and in the second list, we are there in 16 cases. In all 28 cases, the resolution is underway
You are also aware how this resolution plan is going ahead. So that way, the bank is quite optimistic that by September there will be good reduction in both gross NPA and net NPA.
Just to take the NCLT point forward what is your specific exposure to NCLT cases, how much have you provided and maybe some guidance of the kind of write backs that you would expect or hope for?
Initially, 12 cases in list, one our exposure was around Rs 10,000 crore. In second case, it is around Rs 4,900 crore. So, total around Rs 15,000 crore is our exposure, where we have already provided 62% on an average.
First list cases were at advanced stage. In second list cases, half of the cases has been admitted in NCLT. So, resolution by March 19 is expected. My expectation is that the gross NPA in our cases, we have worked out how this resolution will happen. But first thing is, first stage will be by September. Our efforts are that by September, our gross NPA should come down around 9.5% and net NPA below 5.5% , so that we are below 6%.
After March 2019 onwards, our expectation is around approximately gross NPA at 9% and net NPA less than 5%. But then in some cases why this NCLT? In second list case, if it goes for restructuring, that is also solution available.
In those cases, although we will start booking income, the resolution may happen after sometime. It may take two or three years. Because as per the recent RBI guidelines, once that specified period is over, then only we will be able to upgrade. But at least, the accounts will come online and we will start booking interest income, so these things we will have to see and that is happening.
Your loan growth was 11.6% in FY18. So two part question. What is the likely growth in FY19 and which sectors will contribute?
The loan growth during the current year, if you see small and medium enterprises (SMEs), has grown by 10%, the direct housing has grown by almost 16% and vehicle loan has grown by 13%.
So, mainly the growth has come in retail, SME and agriculture. Corporate, we have grown by around 3%. But as far as our capital adequacy is concerned, we are adequately capitalised despite these losses. The capital adequacy is 13.22%.
Second thing is our risk weighted assets to total gross advances, there is substantial reduction there. That means, the quality of advances is being ensured.
So, by changing our mix of advances and that way only we will grow. Our target, during the current year, the overall growth will be 10-12%, but mainly the retail will grow by 20-25% and we have been growing more or less in same line and SME around 10% and agriculture also 10-12% and corporate 7-8% so that is our target.
How much have you provided for already in FY18 and what will be the credit cost that is the provisioning that you will have to do in FY19?
If you see credit cost, the comparison with the current year 2017-2018 will not be proper. This year has been extraordinary year, where some of the previous year provision and the current year was also made because of the RBI regulations. So we wanted to strengthen our provision coverage ratio (PCR) also. Because from last year 55%, now we have improved to 58% .
If you see both years, let us see 2016-2017 and the credit cost was 2.20. The current year of course the credit cost has grown up to 3.90 because of these extraordinary reasons.But going forward, there is no carry forward and mainly the normal slippages will be there. So my target is that we will try to restrict the credit cost below 1-1.25%.