Mangalore-based public sector Corporation Bank plans to restructure outstanding loans totaling Rs 1,000 crore given to 375 small and medium enterprises (SMEs), which are facing difficulties in paying monthly installments on account of tough economic conditions.
If loans stop yielding interest, they are classified as non-performing assets (NPAs). By rescheduling loans in difficult conditions, banks help their clients and also maintain their own balance sheets better. It is better to get something rather to lose everything. Restructuring of loan helps the bank and clients both.
"We have told customers that we would help them tide over their financial problems wherever they would be facing one by taking measures such as restructuring their loans," Corporation Bank's chairman and managing director, J M Garg, told an analyst conference in Mumbai.
The bank, which declared a 34 per cent increase in third quarter net profit to Rs 256 crore, has said it is monitoring and maintaining its quality of assets by deploying policies that will prevent or reduce bad loans in the SME and the real estate sector. Garg said the difficult times for these sectors may last a little longer than expected.
"There is some heat in the auto industry, especially the SMEs in this sector. The gems and jewelery sector is also facing a problem," he said adding that agriculture and agro-based industries and the infrastructure sector would drive economic growth this year.
"We are optimistic on the infrastructure sector and if this sector grows, then a lot of non-fund business would also come into our portfolio which in turn would increase our market share as well as our income," said Garg.
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