CHENNAI/MUMBAI, July 2: Indian Bank, which is struggling to come out of the mess created as a result of poor asset quality, has posted a Rs 301.50 crore net loss for the financial year 1997-98, taking the accumulated loss to a staggering Rs 2403.38 crore. Nevertheless, this year's performance has been an improvement over last year's, when it posted a loss of Rs 389.09 crore.With the accumulated losses of the bank reaching a huge level, the bank might find it impossible to wipe out these losses for at least eight years without another round of bail-out by government in the form of write-off of recapitalised funds, Indian Bank chairman S Rajagopal told reporters in Chennai today.The bank's net NPAs, which had been brought down by Rs 101 crore to Rs 1,779 crore in March 1997, have risen again in the last fiscal to Rs 1,889 crore. In percentage terms, the NPA level went up from 25.91 per cent to 26.79%.Banking sources in Mumbai said despite an all-out recovery drive there has been a distinct slip in therecovery of bad assets. The top sticky accounts include MVR Exports, Ganapati Exports, East West Airlines, Saket India, Gemini Pictures, Square Deal Agency, JJ TV and Ramarao Adik Education Society. Some of these accounts involve politicians and their kith and kin. Indian Bank is a classic example of how politics can kill a financial institution. The gross NPA figure of the bank jumped by a whopping Rs 1,373 crore between December 1994 and December 1995 the last year of former chirman Gopalakrishan who has claimed that "NPA is a matter of perception". The beneficiaries include film producers and politicians.Rajagopal said the bank was awaiting legislation providing for the establishment of an ARC to take up not only the bad debts of Indian Bank for recovery, but also those of other banks. Further, the bank would approach the government after a few years for writing off fresh capital infusion and reduction in the paid-up capital of the bank, Rajagopal said.Claiming the higher NPA level in 1997-98 wasdue to poor economic conditions and tight money situation, Rajagopal said the loss would have been less but for the impact of reduction in income to the tune of Rs 113.99 crore and increase in operating expenses by Rs 46.32 crore. Indian Bank had received recapitalisation funds to the tune of Rs 1750 crore and was expecting a further dose of Rs 400 crore, Rajagopalan said and added that the full impact of capital infusion would be reflected in the financial results for 1998-99.Rajagopal said he would seek to persuade the government to expedite the grant of Rs 400 crore, but was planning for recovery irrespective of whether this money came or not. Once an asset reconstruction corporation was set up as a subsidiary, Indian Bank would be able to `sell' its unreturned loans to the new entity at a discount for which the government would issue bonds to the bank.
