There are also other old NPAs, in which the bank is not able to sell the assets due to valuation and legal issues.
How are you addressing the challenge?
All these NPAs are old and 55-60 per cent are from Kerala.
We are relooking at our policy. We have exited from cashew and jewellery sectors and decided to lend only to students with placements. No NPA was reported in accounts sanctioned in the past two years. Most important, we need to grow more outside Kerala, since the culture of repayment is not favourable here.
Is Fairfax convinced with your strategy? Have they given a nod for the deal?
We had told them around Rs 600 million could be a loss for 2017-18; it has grown extra. We are confident the bank will turn around in 2018-19, with at least Rs 1-billion profit. We have also told them the bank will give 15 per cent return on capital in the next five years, in line with DCB Bank or RBL.
We have got approval from the Competition Commission of India. We are hoping approval from the Reserve Bank of India will come in the next 15-20 days.
What has been done to turn around the bank?
We need to grow the balance sheet, which did not grow for the past three-four years due to lack of capital. The bank did not encourage deposits, since lending was challenging. With the new capital coming in by May-end, this will help CSB expand physically and its balance sheet.
Any structural change?
All new businesses are becoming separate verticals, including two-wheelers, agriculture and MSME (ministry of micro, small and medium enterprises) and gold. This will improve our focus. Besides, we have recruited nearly 60 chartered accountants to monitor the accounts.
We are also setting up a centralised credit hub in Chennai, to boost our credit book.