IDBI slaps notice on 25 cos, to trim NPAs below 10 pc

“IDBI’s NPAs should come down in a big way,” IDBI Executive Director J N Godbole said pointing to debt restructuring efforts by the FI for ailing old economy companies and the flurry of notices served on willful defaulters after the promulgation of securitisation ordinance.

IDBI’s NPAs were at 11.69 per cent of its advances till March 2002. It has come down from 14.82 per cent in 2000-01.

There were still 525 NPA accounts where NPA AMOUNTED to Rs 6,500 crore. Bulk of the NPAs (Rs 5,412 crore) were on loans given at higher interest rate of 14 per cent and above.

Considering this fact, the FI is actively taking up debt restructuring cases of many old economy companies, which ran into losses following the recession in their sectors.

“We have also issued notices to 24-25 companies. IDBI jointly with other FIs have served notices to over 50 companies,” Godbole said. The total funds locked up with the wilful defaulters are over Rs 1,000 crore.

“Many companies have come forward to settle their claims after the securitisation ordinance was issued,” Godbole said.

Since the FI was not permitted to sell the assets before the securitisation Bill is passed, as directed by Supreme Court, the NPA recovery process was expected to be slow.

Official sources, however, said the FI has targeted to reduce its net NPAs to less than 10 per cent.

IDBI, which made an accelerated provisioning of Rs 2,500 crore last fiscal to write off bad loans, plans similar provisions this fiscal as well, the sources said.

The higher provisioning for NPAs had eroded the profits of the FI to Rs 411 crore last fiscal from Rs 756 crore in 2000-01.