Yes Bank not to sell bad loans to NARC – The Economic Times

Clipped from: https://economictimes.indiatimes.com/markets/stocks/news/yes-bank-not-to-sell-bad-loans-to-narc/articleshow/82360830.cmsSynopsis

The bank, meanwhile, is pursuing its objective of owning a majority stake in an ARC and is waiting for the new set of guidelines from the Reserve Bank of India (RBI), chief executive Prashant Kumar said.

MUMBAI:Yes BankNSE -4.47 % will not sell any bad loans to the newly proposed National Asset Reconstruction Company (NARC), its top executive said, as it will be able to recover more than the bad debt aggregator.

The bank, meanwhile, is pursuing its objective of owning a majority stake in an ARC and is waiting for the new set of guidelines from the Reserve Bank of India (RBI), chief executive Prashant Kumar said.

RBI has refused Yes Bank permission to hold a majority stake in an ARC, citing conflict of interest.

“We would still like to transfer assets to an ARC which can be controlled by the bank because this will optically enhance our bank’s numbers to investors and depositors,” Kumar said. “Though we have provided for these loans and it will not save us any money from a capital point of view, a 3 per cent NPA is optically better than a 15 per cent NPA.”

Kumar said transfer to an ARC would help free up top management time away from managing NPAs and towards revenue earning. Yes Bank would not, however, want to transfer its bad loans to the envisaged NARC.

“NPA resolution requires a deep understanding of the loan, which we have of the accounts we hold. An understanding helps in quicker recovery. We have a team of 100 professionals who have done a good job. Transferring to an ARC would mean depending on their judgement and paying them a management fee. We can do the recovery ourselves faster and cheaper,” Kumar said.

The bank made recoveries of ₹4,933 crore from over 100 large and small accounts during the whole year and has targeted ₹5,000 crore for FY22. “We expect cash recoveries to beat ₹5,000 crore and slippages to be below that number, which will help our profitability. Our loans due from 31 days and above are down 21 per cent since the last quarter which gives us confidence on asset quality,” Kumar said.

In the quarter ended March 31, the bank added fresh slippages of ₹12,035 crore from Covid-19 impacted sectors such as real estate, hospitality and tourism, which were under wraps due to the Supreme Court-ordered moratorium on non-performing assets. After recovery upgrades and write-offs worth ₹16,303 crore, gross NPAs were down to ₹28,610 crore, or 15.41 per cent of loans, from ₹32,878 crore, or 16.80 per cent a year ago.

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