We have transformed loans worth Rs 600 crore: LV Prabhakar, MD & CEO, Canara Bank

The compounding amount will hardly be about Rs 160 crore which we will get from the government.

Since last week Canara bench Received requests for restructuring loan accounts worth Rs 700-800 crore from which it accepted requests worth Rs 600 crore, LV Prabhakar, MD & CEO, told Shritama Bose. The lender expects applications worth a maximum of 13,500 crore for the scheme, he added. Edited excerpts:

How many restructuring requests have you received so far and how do you deal with them?
We have evaluated internally and as far as corporate and retail are concerned we expect around Rs 13,000-13,500 crore on the higher side. But till now the inquiries we received are hardly worth 700-800 rupees. We have already called Rs 600 crore. Retail accounts make up just under 20% and the rest are businesses.

Apart from the requirements of the central bank, what eligibility criteria do you follow?
There are only two criteria. One of them is that these people should be affected by Covid. The second is that this project should be viable in the future. The projected cash flows should be sufficient to pay the installments.

How do you deal with personal borrowers who may have lost their job or source of income and have no immediate plan to get back on track?
In my retail book apartments are around Rs 60,000 crore. Most of these borrowers are employees and very few of them have lost their jobs. We have Canara Bank’s Covid program where we have already given some money to the people who needed it. Then we restructured it for everyone who wanted it restructured and also gave the moratorium. So we believe that there will not be much cause for concern for our bank in the long term.

Have you noticed an improvement in the financial situation of borrowers granted the moratorium?
The moratorium is now history because all installments have already been repaid. Now for the hold amount that was not classified as NPA (distressed asset) but otherwise could have been NPA had that hold not been in place. This amount was approximately Rs 10,300 crore according to the balance sheet we declared in June, for which we have already made a provision of Rs 1,030 crore. Today the same holding amount has dropped to Rs 4,000 crore. This means that out of Rs 10,000 crore, Rs 6,000 crore has already been paid and these people have come off the queue. Because of the facilities people are getting now, they want to address the problem instead of delaying the problem.

Their net interest income (NII) is up 29% year over year (yoy). If we eliminated the effects of the moratorium and compound interest, would growth have been lower?
The compounding amount will hardly be about Rs 160 crore which we will get from the government. Our retail customer base has grown by over 8%, residential construction has grown by over 13% and our total domestic loan book has grown by 4.77%. This has contributed to our interest income. Another point is that last September my deposit cost was 5.55% and now it is 4.75%. We could get a yield on advances of 8.02%. Because of this, NII grew 29%.

How do you rate credit growth?
We will expand our loan book by 6-8%. We are already seeing growth in residential construction. Agriculture and MSME (micro, small and medium-sized enterprises) will drive growth. Businesses are coming back to raise capital and they will grow too, but the growth will be driven by MSMEs, housing and then personal credit.

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