After reporting a huge loss of Rs 1,126.24 crore for July-September, 2015, the highest quarterly loss posted by any bank in over a decade, Bank of India (BoI) has begun a massive clean-up operation. Its Board has finalised a slew of measures to tackle the rising non-performing assets (NPAs), including refinancing at least Rs 3,000 crore worth of loans extended to large companies so that they can be resuscitated. Accordingly, the bank has refinanced loans given to two power companies -- Adani Power Rajasthan with Rs 400 crore exposure and Udupi Power Corporation with Rs 1,000 crore exposure. The bank has also approved refinance or flexible structuring of four projects under the 5/25 scheme, where banks can refinance loans for 25 years.
Apart from these, Bank of India has approved refinancing for Bhushan Power & Steel where it has an exposure of Rs 891.42 crore, Adani Power with an exposure of Rs 347.17 crore, Bhushan Steel has loan outstanding of Rs 322.83 crore and Lanco Amarkantak Power Rs 132.76 crore. The bank will also undertake strategic restructuring in Electrosteels Ltd, where it has an outstanding of Rs 230.27 crore, and Shivvani Oil and Gas Exploration Services, where the bank's exposure is lower at Rs 104.80 crore. Both these companies were earlier referred to the corporate debt restructuring (CDR). The non-CDR accounts where the bank has invoked strategic debt restructuring (SDR) is Monnet Ispat and Energy, a sponge iron and steel manufacturer, and Jyoti Structures, a manufacturer of power transmission lines and towers.
The bank will implement a non-discretionary and a non-discriminatory policy of one-time settlement for NPA borrowers other than wilful defaulters. Borrowers of Rs 5 crore and above will be allotted to deputy general managers and general managers at the head office for quick follow-up and resolution in a specified timeframe. Cleaning up of books at BoI began with the new chief executive officer and managing director Melwyn Rego taking charge three months ago, in August. Rego was previously deputy managing director withIDBI Bank. He said at a press conference last week, "The loss was largely due to the backlog in provisioning towards pension and lower interest income."
According to him, the bank's overseas business shrunk and its asset quality deteriorated due to economic conditions. For the quarter ended September 2015, the gross NPAs of the bank rose to Rs 29,894 crore, about Rs 6,250 crore higher than the preceding quarter. As a percentage of total assets, the gross NPAs stood at 7.55% of its loans, forcing the bank to make a provision of Rs 3,237 crore, which is 236% higher than the year before.
Source: http://pib.nic.in/