We will get to profitability in next one or two quarters, says Mrutyunjay Mahapatra

Syndicate Bank is going through profitability stabilisation phase at present after returning to profits in Q3 and Q4 of the last fiscal, says Mrutyunjay Mahapatra, its MD & CEO. In an interview with Mansee Dave, Mahapatra said a couple of stresses from unknown quarters were seen in the first quarter, which made the bank go for aggressive provisioning to stay out of any PCA trigger.

Your losses have decreased in the first quarter to Rs 940 crore. Provide a timeline by when Syndicate Bank will return to profits?

We have already returned to profit in Q3 and Q4 of the last financial year (FY2018-19), however, we were going through a stabilisation phase of profitability. During the first quarter of the current financial year, we witnessed there were a couple of stresses, which has come from unknown quarters and Insolvency and Bankruptcy Code resolutions did not play out as planned. So we took aggressive provisioning in the first quarter, essentially to stay out of any PCA trigger. I think we will get to profitability in the next one or two quarters.

There is a decline in Syndicate Bank's NPAs, but it remains above 11% yet. Tell us the kind of recovery in terms of NPAs is expected in FY20?

Recoveries are in two buckets. The first bucket is related to IBC resolutions, which we are pegging at between Rs 2,000-2,500 crore if all the resolutions take place. The normal run rate for our recoveries through other channels like Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act and the upgradation among others are targeted at Rs 4,000 crore for the whole year. So, we are expecting to recover Rs 6,000-7,000 crore during the current year.

You have exposure in HDIL, which has been taken to IBC. Have you provisioned anything regarding this account?

HDIL has gone into the second year of NPA status, so we have provided whatever is required as per the Internal Revenue Code (IRC) requirements. The haircut right now is difficult to estimate because it depends on the resolution professional. Based on the process prescribed as per the law, we will consider all the assets they have and will determine what is an optimal haircut that needs to be taken.

Did your business reap any benefits, especially in the home loan segment amid ongoing liquidity concerns in the NBFC sector?

As you know that we finance NBFCs and we are one of the leading financiers of NBFCs in the current market and we have gained a lot of pools because of the NBFC liquidity issue, which I believe is more a perception than reality as bankers are willing to lend to good NBFCs. The home loan relaxation given by RBI to NBFC in the affordable housing segment is also like to boost our credit inflow in NBFCs and increase our market share.

Do you expect any help from the government for growth, if yes, then let us know the expected amount of capital?

The finance minister has announced a growth capital of Rs 70,000 crore for public sector banks. Everyone from the banking segment feels that we have enough regulatory capital. The growth capital has been announced for the banking system to support the growth in the rural sector and infrastructure as well as investment growth. But this additional capitalisation of the public sector banks is yet to be discussed and it will let us know the amount each bank will get, including Syndicate Bank.