IOB’s cash recovery target for FY22 stands at Rs 4,500 crore: Partha Pratim Sengupta

Partha Pratim Sengupta, Managing Director & Chief Executive Officer, Indian Overseas Bank (IOB) talks about provisions, recovery, targets, prompt corrective action (PCA) tag, capital raising plans and talks related to privatization among others during an exclusive interview with Swati Khandelwal, Zee Business. Edited Excerpts: 

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Q: This quarter we have seen an increase in provisioning numbers. Which type of account is showing more problems and will we be able to reach the sustainable levels in terms of provisioning?

A: To strengthen our balance sheet, it is very important to make our PCR (Provision Coverage Ratio) strong and strengthing it is better for all of us. On the basis of the same, we have already emphasized on this step and you will see that our operating profit on the year-on-year basis has grown by 67%. Even after this growth, we have because there was the first wave of CORONA and now there is a second wave of CORONA, some stress can be seen in the future. Keeping the same in mind, we have strengthened our PCR book and currently, the PCR stands around 90.34% and by further strengthening our position, if there is any stress, we will handle it very easily. So, I would like to inform you about the day when the results were declared was a red-letter day for us because, after 2014 onwards, 2021 is the first time when we declared an annual profit for the complete year. So, it is a big success. Last year, if you remember, we declared a profit for the first time after a continuous loss of almost 18 quarter and we kept increasing this profit in every quarter and finally, our yearly profit came at Rs 831 crore. And we achieved it after keeping our PCR at 90.34%. Going forward, I will say that the financial strength of our bank will be strengthened more.

Q: How much recovery have you seen in this quarter and how much more you are expecting in this financial year?

A: Last time, when we had set the target, there was no CORONA and we had set a total cash recovery target of about Rs 4,100 crore for the whole year. And you will be happy to know that there was an effect of CORONA in the first two quarters, there were lockdowns and even the bank was not able to work with a full staff. When we entered the second quarter, we felt that maybe we will not be able to achieve the target. But in the end, the result was that instead of Rs 4,100 crore, the cash recovery stood at Rs 4,200 crore. As soon as the economy bounced back, we also bounced back at the same rate and the whole situation improved a lot. Even the recovery rate was good. Everything was fine till April but from May due to the second wave of CORONA, slight stress was seen. We are not separate from the economy and it has an impact on us as well. But looking at the experience of the last year, I would like to say that expectations are very positive. Still, there is a lot of optimism in the economy and normalcy has started coming in the second wave of CORONA and lockdowns are being eased out to a great extent. The government's vaccination drive is also running vigorously. Keeping all these factors in mind, we expect that the economy will return back on the growth trajectory from July 2021 and our recovery target, which stands at Rs 4,500 crore for this year, and if seen on a quarter-on-quarter basis then this quarter is better than the last quarter of the previous year, till now. However, there is some stress, which was not accepted but it has hit with the second phase but if compared then the figures are quite good. So, this cash recovery target of Rs 4,500 crore for this year will be achieved by March 2021 after normalcy is attained.

Q: What is the development on the front of removal of the prompt corrective action (PCA) tag and what kind of discussion is taking place with the RBI? Can you provide a timeline for it?

A: This decision is on RBI because RBI decides after considering many factors. But I can say that we have fulfilled all the expectations of the regulator, the RBI, not only in this quarter, we are continuously improving the ratio. And in the end, the Government of India support in form of capital infusion of Rs 4,100 crore provided to us has made these ratios more comfortable. I can just say that we have requested the RBI and provided the audited figures to it. So, now, RBI will decide on what it is going to do by keeping an eye on the country’s economy and the balance sheet of the bank. But what were the expectations of RBI as a regulator from us has been completed from our end.

Q: Do you have any capital raising plans? Also, the government is shortlisting two public sector banks to privatise them and IOB has its name in it. Are there any such discussions or preliminary talks related to it?

A: As far as the capital raising plan is concerned, it was discussed at the board level keeping in mind our capital growth and the stress that CORONA can create and have created a plan to raise capital up to Rs 2,000 crore for this year. However, it is just a plan till now and going forward we will make a decision on it after looking at the situation. When it comes to privatization, we do not have any such communication from anywhere and yet we have not thought anything about it, neither have discussed nor criticised it because we are just working to strengthen the bank further. So, all of our staffs are focusing on the same and are working with the same aim and going forward how we can strengthen it. So, except for the media reports, I do not have any information about privatization or non-privatization, so I would not like to make any comments on this issue.