Textiles second largest contributor to ICICI NPAs

MUMBAI, JULY 8: The textiles industry has accounted for the largest increase in the non-performing assets (NPAs) in the ICICI portfolio for ...

MUMBAI, JULY 8: The textiles industry has accounted for the largest increase in the non-performing assets (NPAs) in the ICICI portfolio for the fiscal 1997-98. The NPAs in the textiles sector increased from 6.3 per cent to 10.9 per cent of ICICI’s total NPAs of Rs 2,811.11 crore. Textiles constitute the second largest NPA account in ICICI’s books.

The largest NPA account is made up of the financial institution’s exposure to the manmade fibres industry, a sector closely associated with the textiles industry. The manmade fibres industry accounts for 17.2 per cent of ICICI’s NPA, up from 16 per cent in 1996-97, an analysis of its annual report shows.Textiles and manmade fibres sectors account for NPAs worth Rs 307.65 crore and Rs 482.94 crore for 1997-98, up from Rs 123.37 and Rs 313.64 crore in 1996-97 respectively.

Fresh disbursals by ICICI to the textiles sector in 1997-98 were Rs 710 crore, amounting to 4.5 per cent of its total disbursals. The total outstanding exposure to the sector is Rs 3,240 crore,constituting 8.6 per cent of its total loan exposures. Nearly 10 per cent of ICICI’s exposure to this sector has turned into NPAs as on March 31, 1998.

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Fresh disbursals in the manmade fibres sector amounts to Rs 60 crore against an outstanding of Rs 1,100 crore. The other sectors which have shown an increase in NPAs in percentage terms are other chemicals , iron and steel , machinery , electrical equipment electronics, transport equipment.

Though the other sectors managed to reduce their NPAs as a percentage to ICICI’s increased asset base, they have recorded an increase in their NPAs in absolute terms. The only sectors which have managed to reduce their NPAs in absolute terms are sugar, fertilisers and pesticides and chemicals.

ICICI had reported an increase in the net NPA to 7.6 per cent of its total loan assets from 6.8 per cent in 1996-97. ICICI manages its NPAs in a two-track system. The first category of NPAs consists of borrowers to whom ICICI has decided to recall loans and enforce its securityinterests.

As on March 31, 1998, there were 553 such borrowers in ICICI’s portfolio and the aggregate book value of loans to them was Rs 878.5 crore.

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The second category of NPAs consists of borrowers who are unable to service their debt fully for a variety of reasons but are expected to return to performing status. There were 658 borrowers in this category and aggregate book value of loans to them was Rs 1,932.6 crore.

According to ICICI’s 1997-98 annual report, as on March 31, 1998, the net outstanding amount of the 20 largest recovery cases was Rs 407 crore with no individual borrower accounting for more than Rs 82.25 crore.

The net outstanding amount of the 20 largest NPAs other than recovery cases aggregated Rs 673 crore, with no individual borrower accounting for more than Rs 75.76 crore.

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