Bad loans rise at ICICI Bank

The CEO and managing director of ICICI bank Chanda Kochhar says that they expect

RELATED ARTICLES Delhi is India's best city to live in: CII Report No respite from inflationary pressure in near future: CII Urgent need to focus on specialised skills: Study Banks focused more on customer, says CII study

the banks non-performing assets to come out next quarter because “the peak is behind us.”

She said the big message in last quarter results was that the additions to NPA were down and our provisions were down because of effectiveness of collections, and change in credit parameter as well as reducing unsecured loans in the loan book.

She said she could not project a specific number of NPAs for the next quarter because that would be “a forward looking statement, and I don’t want to do that.” ICICI's gross bad debts had risen to 4.7 percent of advances during the September quarter from 4.2 percent in the June quarter. As reported in Financial Chronicle, the bank had written off Rs 600 crore in the second quarter and Rs 700 crore worth of loans were sold off to Asset Reconstruction Company of India.

She also said interest rates will remain stable for a while and credit offtake is likely to improve four to five months.

Kochchar was talking to the press on the sidelines of the India Economic Summit organised by the World Economic Forum and CII.

She also said that the clarification sought by banks on Press Note 2 issued by the commerce ministry is still awaited from the government, but asserted that ICICI was an Indian bank and would remain so, irrespective of any definition. “We are Indian controlled, and Indian managed.” She said the Note had create some confusion on the ownership pattern, but it had affected the banking sector as a whole and early clarification would help. The press note had sought to clarify downstream acquisition by companies, including banks, requiring that they would be deemed to be Indian, if the parent company was owned 51 per cent by Indians or Indian entities.

Unwilling to be drawn into whether nationalisation was beneficial to the banking sector, and had helped economic recovery, she said the main strength of the public sector banks was its network and reach. What had really helped the banking sector and the economy was the high quality of regulation of the banks and self-regulation within banks. “Our regulation was strong, and it was sure.”

She said what also helped was the standard of lending by banks in the country. “Indian banks did not lend without income proof, they did not lend only against assets, like in the West.”

She said credit offtake in infrastructure had not improved. There is a project pipeline worth $250 billion which will be used in two and a half years. Even this sector should start moving in four to five months