Oriental Bank of Commerce expects recovery of Rs 1,200 crore (Rs 12 billion) in the next year from the defunct Global Trust Bank.
"We have been able to recover dues better than asset recovery companies," said an elated B D Narang, chairman and managing director, OBC.
The public sector bank, which took over GTB last year, has already made a cash recovery of Rs 100 crore (Rs 1 billion) from dues owed to the private sector.
"We have upgraded from non-performing assets to standard assets amounting to Rs 50 crore (Rs 500 million), made compromises in a number of case totally amounting to Rs 124 crore (Rs 1.24 billion), and have filed criminal cases against borrowers for a total sum of Rs 300 crore (Rs 3 billion)," Narang told Business Standard.
This is in addition to its ability to restructure loan to the tune of Rs 355 crore (Rs 3.55 billion).
Many banks have transferred their bad loans to the ARC, but OBC has not gone down that road.
"We have invested time and money and structure the deals far better and in a shorter time period," said Narang.
The above recovery will be replicated in the next two months, and the bank hopes to make good GTB losses is less than two years, he added.
GTB's operating losses have been virtually wiped out, and the bank is expected to make operating profits in the first quarter of next fiscal, making GTB history by mid calendar year 2005. GTB's non-performing assets are in the region of Rs 1,500 crore (Rs 15 billion).
OBC has sought government permission for a 50-million share issue, which will reduce government holding from 68 per cent to 53 per cent.
The public sector bank's current capital adequacy ratio stands at 9.4 per cent as on December 31, 2004. The public issue offering will help the bank beef up its CAR.