The Telegraph
Since 1st March, 1999
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Recovery law to push up profit for Canara

New Delhi, Nov. 29: State-run Canara Bank expects higher revenues for the current fiscal on the back of an increased loan-recovery amount and profits.

Aided by the Securitisation Bill passed by the Lok Sabha on November 22, Canara Bank has started sending notices to loan defaulters for recovery of the loan amounts.

“We have started sending default-notices to around 10-15 defaulters who have more than Rs 10 crore liability with the bank,” H R Shenoi, general manager of the recovery wing of the Bangalore-based bank told The Telegraph.

“We have identified around 450 out of 700 parties who have an outstanding loan amount with us. This will generate around Rs 400-450 crore,” he said and added that any recoveries on the existing provisioning of non-performing assets (NPA) will directly impact the bottomline.

Shenoi said the bank currently has a net NPA of 3.8 per cent. “This will come down to around 2.5 per cent as a result of the recoveries from the existing defaulters.”

He said the majority of the defaulters have non-suitable account with the bank. “None of them have filed cases against us. Most of them are coming across the table for negotiated settlement.”

Analysts say the bank, which have recently raised around Rs 385 crore from primary market, will post a net profit of Rs 1,000 crore for this year.

The bank has reported a growth of 13.9 per cent (compounded annually) on deposits and 18.5 per cent growth on advances. The capital adequacy ratio, which is an indicator of a bank’s health, stood at 11.88 per cent above the Reserve Bank of India’s stipulated 9 per cent.

Parliament recently passed Securitisation and Reconstruction of Financial Assets Bill which allows banks to seize and sell property belonging to defaulters without getting mired in courts of law.

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