He highlighted that the public sector lender has managed to reduce its non performing assets (NPAs) by Rs 3,990 crore in past one year. Further, he sees NPA reducing going forward.
Below is the edited transcript of his interview to CNBC-TV18
Also read: FIIs inflow touches USD 22 billion in 2012 so far
Q: Are you expecting any kind of restructuring? What's the expectation on the road sector?
A: We have a very small share in Male Airport project. It is the Axis Bank who is in the lead. Apart from that the revilement has not even been 50 percent of the limit sanctioned. Both the banks have a confirmation from the Maldives government that they will reimburse in the event of termination.
Our leader has already filed with them. Apart from that we have heard that the GMR has also made a claim for damages. However, we are very sure from the GMR that our account will be serviced until this comes. This has to service as per the interest, so we are not much perturbed about that.
Q: So you have the confirmation from the Male government that you will be fully compensated for whatever you have lend to GMR so far?
A: Yes, there is a guideline that they will be giving the comfort. Much before the sanction, that letter was there.
Q: If you approach them post the termination, what did they tell you?
A: We have a confirmation to the bank. They will be giving the comfort as far as the repayment of the loan.
Q: How much is your exposure?
A: We have altogether sanctioned USD 15 million, of that only USD 22 million will be availment. So, on date they are servicing the loan. For at least next one year they will service, without any problem.
Regarding the road sector, the National Highway Authority has already moved a paper to the cabinet committee. That paper say's, there should be some comfort to the banks in terms of the security available. Otherwise also, currently we don't find any road sector project come in for any restructuring. There was only one case in Tamil Nadu and that was also sorted out.
And as far as asset quality also there is nothing. In the last two years we had recovered substantially and brought down the Non-performing Assets (NPA) level to hardly around Rs 3,990 crore. It is only in these two quarters it has gone up. However, as on date our recovery has been very encouraging. It is much higher than what we achieved in the two quarters. So, we are confident of recovery. With that we will have to contain the NPA. In future the NPA level could be very lower.
Q: Will your NPAs be lower in the second half as compared to the incremental NPAs in the first half?
A: Yes, it will definitely be lesser than that.
Q: How much are you expecting by way of recoveries, in the current quarter?
A: We did around Rs 400 crore of recovery in the first two quarters. Now we have already doubled. As on date, recovery and up gradation is Rs 800 crore.
Q: At the moment the Kingfisher lenders meet is underway. Do you have anything to update in terms of what the management has agreed?
A: Actually, I came to know that from the paper and you. I was not a part of that meeting in the that State Bank of India (SBI). However, they are really taking care. There will be some equity infusion, maybe they have to. They are now almost in the process of getting the equity.
If it go through the deal, it will be very good for the company. But as on date, our exposure is also very limited and we may have to take a call on that. We will be in line with the SBI's decisions.
Q: What is your capital adequacy at this point in time? What is tier-1 and what has the government told you?
A: We have a tier-1 adequacy of 7.63 percent. Overall our capital adequacy is very good. It is near to 13 percent. As far as our ability to achieve over 8 percent we are expecting around Rs 1,500 crore, but that was at the rate of our Kharif growth of 18-20 percent.
Now that our Kharif growth is not likely to be that well, but there is a certainty that we are getting within that amount from the government. The government is open to that whether the rights issue can also be examined by banks when we go for this government in future.
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