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PNB expects reduction in NPAs in next 2 quarters

CH SS Mallikarjuna Rao, MD& CEO, PNB tells that slippage has been high-pitched due to Covid impact and high-pitched proforma NPA, however PNB expects better importance in terms of slippage in Q1 and Q2. The bank expects things to improve by June end. Edited excerpts: ET Now: Your gross cyberspace NPA that stands at about 14.1%, which is slightly lower than the pro forma gross net NPA of 14.71%. Although you have reported profits-- your overall stressed assets are one of the highest amongst the PSU banks. What had given rise to such high NPAs? CH SS Mallikarjuna Rao: See there are two things-- PNB has been bracing high-pitched gross NPA percentage for long time and there has been a considerable improvement in the last one year. Even though if you look at the remarkable level-- either at the gross NPA or the net NPA compared to March 20 -- and the March 21 anatomies remain disrupt, "its just" flat, there is no increase in the count. However, in terms of the percentage, increases are appearing because the credit growth has not been very high at the end of March 21. On the contrary corporate approval bible has reduce by almost minus 33%, so in percentage terms it will correlate. Coming to generic watching, comparison with countless public sector banks our egregious NPAs are high whereas net NPA is in a restraint outlook, even if they are currently, it is appearing at 5.7 exclusively because of the pro forma NPA. Due to COVID what happened was there was increase in the higher element of slippage but we are expecting the sales slippage to go down by way of recovery in the NPA cost and too controlling the slippage in the next 2 one-fourths that is quarter one and quarter two ---we expect better sentiment in terms of the slippage. So, one intellect is that gross NPA has been high-pitched in PNB for quite some time where we have been enduring to reduce that to a greater extent. Second is ---because of the pro forma NPAs, the slippage has been high-pitched. Third is because of the advances, raise is not being there in percentage terms, it is looking elevated because excellent figures remains the same in both gross NPA and net NPA comparison with last year.ET Now: The COVID second wave has been very severe --tell us a little bit about the impact on the accumulation efficiencies, on the various segments and if you were able to yield us a geographical state wise break up as well? COVID firstly wave's impact was nullified almost by way of various measures taken by the Government of India and RBI and as a result the economy started to coming back from October onwards. Once the COVID impact number two came, it has been more severe, in terms of impact on the lives, consequence on the people to get hospitalised sociologically. With respect to economy, it picked up pace October onwards but after second wave--impact on economy is more pronounced because the time available to their disposal for recuperating or coming back to normality was not there. The major affected areas are MSME because MSME are groups where they will not have very high cash surplus. Following the adjournment of the COVID-one, they were given disaster personal credit line by way of 20% up to 25 crore which was increased to 50 crore and later on-- in the month of August they were identified some accentuated areas. Now, those who are trying to come back to normality, if you look today, even though the slippage seems elevated across the banking industry in terms of retail and agriculture, I expect retail to settle down in the next 2 quarters that is by June and September whereas MSME stress will continue for some more term which need to be addressed more effectively.So, we expect that the things to improve and we come out of the COVID by June end and economy is looking that effectively during the current financial year along with improvement in the MSME segment.ET Now: What various kinds of rise or what kind of uptick do you expect in NPAs for next two fourths? I do not expect gross NPA or net NPA to increase in the next two fourths, on the contrary it will go down. For that two reasons- one is credit growth will be there, second is in real time outstanding reduction will do in gross NPA and net NPA effectively, we are very confident of concluding the percentages in the next 2 quarters.ET Now: How much do you expect to come via the NCLT route? At this object of age, it is really very difficult for us to estimate for the entire year of recovery due to COVID. We would be having a correct estimate when we declare the results for June, however, to have an estimate up to June we have identified that recovery and upgradation should be at least 8,000 crore by June 2021. So, in the current quarter previously two months have passed, third month is running we have already went 3000 crore retrieval and reduction together that is another 4000 -5 000 crore, we are expecting during the current month where it will go up to 8000 crore. We will make overall time approximation after we declare the results of June because we have to look at NCLT disputes too and see how it is going to pan out post pandemic. Coming to couple of histories for especially DHFL account in the month of March, we have received money from Bhushan Power which was NCLT settled report, DHFL is the one where we are expecting improvement during the current quarter, but we will have to wait and determine because the case is in the NCLAT --where the results should process in the finance stages. Our proper estimate should be out where reference is declare the results of June.ET Now: What are you made of the kind of steps that have been taken by the Reserve Bank for MSME and what more do you think needs to be done? The current approaches declared by RBI are sufficient because RBI has been very sensitive in the last four and a half years particularly when the COVID onset has come in our country. So, they have come back with every plan declaration measures in such a way to maintain liquidity in its own position, require a easing to the banks in terms of provisioning, restructuring window and government also has supplemented by providing the emergency bank line. Now, the question is- from October onwards in the last year -we have seen good sum of line-up volume built up with MSMEs-- as a result we were expecting MSME stress "re coming out" but Covid second waving happened. Nonetheless, across the globe, currently COVID second curve nearly has receded particularly in the Europe and US located, where our exports are in various sectors, I am expecting that July onwards the lineup work once again will build up in terms of the MSME segment and the next in nine months will be proper growth. This is why RBI has though shortened the GDP estimates--they have articulated it at 9.5 percentage in this financial year, so MSMEs order book will be much better from July onwards. Already some of them are currently in better position but execution and the establishment of the operating round to get back the money is the one which takes time may be one month-one and a half month. ET Now: Reserve Bank has maintained a status quo on charges. What is your outlook on the measures that have been taken by the Reserve Bank and what is going to be impact on your fund work? We is not have any impact on treasury book because last year we have already made 4395 crore which was the highest in the history of PNB. Similarly, this year as well I am looking forward to the growth income from treasury could be there in the Q1 and Q2 that is H1 would be better and we will have to wait and see how H2 will be standing out because already the interest rates have bottomed out. In order to continue the sentiment because COVID impact is there --the RBI has not touched the repo proportions they have maintained in the last four policies, high extent of liquidity is available in the market. Nonetheless, we are not seeing high-pitched amount of require by way of brand-new projects coming in the speculation but we expect that the government’s programs affirmed through the budget in terms of investment in infrastructure, four segments and aviation segment will start knocking off from next one month or two months downwards thereby we accompany some credit swelling. Now, the other objective of the RBI is to control the inflation which they have kept at almost 5.1 bullet up to March 2022. RBI is also trying to protect the what you call yield in such a manner it will not go beyond the limit wherein probably the government will have an opportunity to borrow further in the market. So, considering these factors for some more time-- the interest rates will remain-- if at all there is any possibility of uphill based on the inflationary pressures in the days to come. There could be review in H2 of the current financial year.

Read more: economictimes.indiatimes.com

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