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Federal Bank stares at Rs 200-cr asset stress

By Religare

Federal Bank is dealing with two loans totalling up to Rs 200 crore, which are under stress and may turn into a non-performing assets, a top official said as per the PTI report.

"We have two assets which are in the stressed condition and may slip into NPAs," executive director Ashutosh Khajuria told reporters on the sidelines of an event.

He said the first account is from the shipping sector where it has an exposure of Rs 120 crore, while the second is a steel sector account where its exposure is Rs 80 crore.


Prospects for the shipping sector account are better than the steel sector's, he said.

The shipping company has already received one government contract and may receive one more, which can help improve its cash flows, Khajuria said, adding the company is hopeful of its account getting regularised by September.

The securities held by the bank in this account are also of better value, he indicated.

He, however, did not sound so hopeful on the prospects of the other stressed account from the steel sector.

It can be noted that the bank had witnessed an account from the metal sector slipping into NPA, which resulted in its June quarter earnings dipping by 36 per cent.

The bank's overall exposure to the metals sector where banks have been reporting stress is under Rs 500 crore, he said, adding the power sector ranks the highest among the sectoral distribution of loans for the bank.

The exposure to the distribution companies alone if over Rs 800 crore, he said, adding that all the loans in the sector are performing well and in some cases this might be due to the state support.

Khajuria said it will take at least one more year for the steel sector to recover and added that initiatives like the government target to provide housing for all by 2022 are bound to impact positively to the sector.

The bank today launched a service under which a person can open an account within minutes by using a mobile phone application and uploading data from her Aadhar card and PAN Card.

The initiative involves clicking a hugely popular selfie image, followed by scanning the bar code on the Aadhar card, and taking pictures of the Aadhar and PAN cards.


The photograph clicked becomes the account holder's latest picture for records, while the Aadhar and PAN Card details help in meeting the KYC norms.

Story first published: Thursday, August 6, 2015, 9:30 [IST]
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