Allahabad Bank may recast Rs 200/300-cr loans to steel, textile sectors

Close to Rs 200-300 crore of loans extended by Allahabad Bank to the steel and textile sectors might be restructured during the third quarter of this fiscal. The bank had restructured loans of about Rs 125 crore during the second quarter of this fiscal, Mr D. Sarkar, Executive Director, Allahabad Bank said.

The total outstanding loans under restructured accounts were at Rs 2,941 crore as on September 30, 2011, up from Rs 2,815 crore as on March 31, 2011.

A total of Rs 2,722 crore of the restructured loans were in the standard category while close to Rs 220 crore was in the category of non-performing assets (NPA) as on September 2011.

“Some companies are finding it difficult to bear the burden of high interest rate as they are unable to pass on the costs to their end-customers. So we have to do some restructuring of accounts in sectors such as steel and textiles,” Mr Sarkar told Business Line.

Gross NPA

Allahabad Bank expects its gross NPAs to inch up slightly during the third quarter. The percentage of gross NPA to total advances was at 1.77 per cent as on September 2011, marginally up from 1.74 per cent as on March 2011.

“We moved to system driven identification of NPAs in September. So there will be some system stabilisation issues in the short term. The restructuring exercise might also lead to some sacrifice by the bank.

“Though it is difficult to get an exact estimate of NPAs until we get the final auditors report, however, both these factors might push up the gross NPAs a bit,” Mr Sarkar said.

NIM stable

Meanwhile, Allahabad Bank expects its net interest margin to remain stable or even marginally improve to 3.7 per cent by the end of this fiscal.

The net interest margin improved to 3.68 per cent during the quarter ended September 30, 2011, up from 3.34 per cent during the corresponding period last year.

“We will maintain our NIMs by focusing on operational efficiency,” he said.

shobha@thehindu.co.in