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Friday, January 11, 2013

Oriental Bank may rejig loans worth Rs 2,500 cr

Oriental Bank of Commerce is likely to restructure loans worth Rs 2,500 crore in the next few quarters. The bank has a restructuring book of close to Rs 10,500 crore.

According to Chairman and Managing Director S.L. Bansal, the bank is in the process of restructuring its Rs 450-crore advances to Moser Baer.

The restructuring of advances is likely to drag down margins.

“We have to make additional provisioning of up to 0.75 per cent on restructured accounts, this will put pressure on bottom line,” Bansal said at a press meet on the occasion of a branch inauguration here on Friday. The bank’s net interest margin was close to 2.79 per cent in December and might inch up to 2.9 per cent by the end of this fiscal, he said.

Exposure to Kingfisher

The bank’s Rs 55-crore exposure to Kingfisher Airlines turned into a non-performing asset in the third (October-December) quarter of this fiscal.

“We hope to recover the money by the end of this month,” Bansal said, refusing to explain how the amount will be recovered.

The bank has close to Rs 5,500-crore worth exposure to power-distribution companies (discoms).

“We have already received indications from the Haryana Government for restructuring.

We are working on it. This apart, some restructuring proposals might also come from Punjab, Rajasthan and Uttar Pradesh Governments,” he said.

According to Bansal, power generation companies are also under pressure as discoms are not in a position to pay them.

“This could pose some challenge for banks,” he pointed out.


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