Banks get smarter, cut down on NPAs

CHANDIGARH: The public sector banks are now showing a renewed confidence in dealing with their nonperforming assets (NPAs).
A friendly legislation in the form of the Securitisation Act combined with a host of internal measures have helped the banks make a headway in this direction.
Among the banks in the region, the State Bank of Patiala has projected a zero per cent level of net NPAs at the end of the present fiscal year.
The bank has reduced its level of NPAs from 1.51 per cent to 0.44 per cent during the first half of the present fiscal and has recovered an amount of Rs 40 crore during this period.
Similarly, Punjab National Bank (northern zone) and State Bank of India (Chandigarh circle) have reported recoveries of Rs 40 crore and Rs 85.85 crore, respectively, during the same period.
Says State Bank of Patiala general manager J R Devgan, "We are not adding any new NPAs and at the same time making efforts to reduce them."
He says that the bank will be making 100 per cent provisions for NPAs left at the end of the year to achieve the zero per cent level.
Bankers feel that their has been an improvement in the lending environment and the ''corporates have understood that the action will be prompt.''
Among the various measures adopted by banks include greater monitoring of the NPAs.
Says PNB (northern zone) general manager Harwant Singh, "We have constituted task force committees at regional, zonal and the head office levels. These committees hold quarterly meetings where each NPA account is discussed."
The committees also suggest preventive measures about the accounts that are likely to become NPAs.
Steps are suggested for upgradation, regularisation or taking legal action for the NPA cases.
Apart from this, the compromise policies adopted by the banks too has helped bring down the level.
PNB has floated a compromise settlement scheme whereby powers have been accorded to committees of officials to reach upon a compromise.
Against a target of Rs 24 crore, it has collected an amount of Rs 32 crore through the compromise scheme during the first six months of the fiscal year.
Singh says that the bank has availed of other options like One Time Settlement Scheme of the Reserve Bank of India and has got a good response.
Bankers feel that with the NPA norms becoming more stringent, the banks would be required to continue their focus on the quality of assets.
Though seen as a last resort, the legal options, including Lok Adalats (for settling cases of cases involving smaller amounts) and Debt Recovery Tribunals continue to provide a cushion to the banks in dealing with bad loans.