Hemmed in by NPAs, poor demand, Exim Bank stares at muted year

Mumbai: Hit by increase in non-performing assets and subdued global demand, the national export finance institution Exim Bank is looking at a muted growth of 5-7 per cent for the current financial year.

The bank had witnessed a healthy balance sheet with 13 percent growth in lending in the previous fiscal.

"Fiscal year 2017 is growing to be flat. This year, we are looking at a balance sheet growth between 5 and 7 percent because global demand is low and we have also taken a hit with rising NPAs," Exim Bank Chairman and MD Yaduvendra Mathur told PTI.

Gross non-performing assets jumped to 9.3 percent for September 2016 from 4.2 percent in March.

Net NPAs during the first half of the current financial year rose to 2 percent from 0.9 percent a year ago.

"NPA percentage for us has increased like for others in the industry. It is coming from steel, metals and minerals, shipping and textile sectors," Mathur said.

Mathur added the bank is looking to sell off some of the bad loans.

He said globally, the current financial year has been difficult and domestic companies' overseas businesses are also going through a tough phase.

The bank's fresh disbursement during the year is likely to be in the range of Rs 40,000-45,000 crore, almost similar to Rs 40,000 crore in 2015-16, Mathur said.

He said 35 percent of the balance sheet?comprises loans to sovereigns while the remaining 65 per cent are to domestic companies' overseas and domestic operations.

The chairman said the bank wants to deliver large strategic projects overseas and not do too much of lending to corporates.

"Though we will continue to do that (lending to corporates), we would probably stop lending to infrastructure projects in the country," he said.

"For example, we were taking exposure to shipyards being built in the country for exports, as our mandate allows us to finance export-oriented infrastructure. But, those are big areas where we have found problems... Some shipyards have defaulted," he explained.

Mathur said there is a task force which is being set up by the board to relook at areas on such fronts. 

The task force will come out with its report in a month and based on that the bank will tweak its lending policy next fiscal, he said.

"We will desist from financing sectors where other banks are already present. We are even withdrawing from markets or products where domestic banks have already reached. But we will go in for new markets and new products," Mathur added.

He further said the bank will now focus more on its guarantee business which currently stands at 10 percent of the book.

"Our guaranteed business is only 10 percent and now we are planning to double it, which may take about three years," Mathur said.

He also said going forward the bank would be looking at key sectors for exporting services like IT, ITeS and health where the domestic firms enjoy a competitive edge.

"Domestic companies are exporting IT and ITeS services only to the United States and European Union now and not to Africa and South Asia.

We are now encouraging them to export to Africa and promote the same through project exports," he said.

Besides, the bank is also encouraging domestic companies to export health and educational services to Africa, he said.