As Andhra Bank shifts to realtime tracking, bad loans double

Junking manual compilation of bad loans and going for a computer-based realtime tracking has had an unintended consequence at Andhra Bank: Gross non-performing assets (NPAs, or bad loans) shot up to Rs1,987 crore, twice what was reported at the end of last fiscal.

For the second quarter ended September 30, the bank’s net NPAs stood at about Rs1,085.67 crore. Interestingly, for the year ended March 2011, the bank had declared gross NPAs at Rs995.64 crore and net at Rs273.68 crore.

So under the ‘modern’ tracking system, gross NPAs as a percentage of advances stands at about 2.67% and net NPAs at about 1.48%.

“The shift has captured the entire NPA portfolio, including small-ticket advances and advances in the less than Rs1 lakh category. However, the key contributor to the rise in NPA is in the agriculture loan segment. A reversal of interest rates has triggered additional NPAs,” R Ramachandran, the bank’s chairman and managing director, said.

Bad farm loans alone amount to Rs655 crore. “We are working on recovering most of it. We have doubled the manpower to work on the field and we will wait for the harvest season. We hope to recover at least 50% of it by the year-end,” he said.

The bank has most of its exposure to the agriculture sector in Andhra Pradesh with its headquarters in Hyderabad.