ICICI said to restart special unit to check rise in bad debt

Mumbai: ICICI Bank Ltd, India’s largest private-sector lender, will revive a unit to spearhead a drive to recover bad debts, people with knowledge of the matter said.

The Mumbai-based lender will restart the so-called Special Asset Management Group, which it shut a decade ago, by April, the people said. They asked not to be identified as they’re not authorized to discuss the effort.

Chief executive officer Chanda Kochhar aims to resolve bad debts that jumped to a more than two-year high in the fourth quarter. ICICI joins State Bank of India (SBI), the country’s largest lender by assets, which has a similar unit focused on recovering soured loans called the Stressed Assets Management Group.

Sujit Ganguli, a Mumbai-based spokesman for ICICI, said he couldn’t immediately comment.

The bank’s gross bad-loan ratio stood at 3.4% of the total as of 31 December, the highest level since September 2012, according to exchange filings. The figure doesn’t include restructured debt, which jumped by 40% to Rs.12,000 crore last year.

“In the challenging operating environment, prolonged economic slowdown and the uneven recovery that has been witnessed, we have seen higher slippages from the restructured portfolio,” Kochhar said in a 30 January conference call with reporters.K.M. Jayarao, a senior general manager at ICICI, will run the debt-recovery group, the people said. Jayarao helmed the unit from 2000 until it was disbanded in 2005.

SBI has increased the number of people in its Stressed Assets Management Group and will provide “more resources” to the unit as it attempts to check a rise in delinquent debts, chairman Arundhati Bhattacharya told reporters on 13 February.

Indian banks’ stressed assets, including soured debt and restructured loans, will rise to almost 13% of total advances by the end of March 2016, the highest level since 2001, according to a 5 February report from India Ratings and Research Pvt. Ltd, the local unit of Fitch Ratings. The ratio was 10.7% at 30 September, the latest RBI data shows.

ICICI Bank