MUMBAI: Bank of Baroda has set up a dedicated team of lawyers to speed up recovery of bad loans that get embroiled in litigation.
The state-owned bank has 380 high-value bad loan accounts with total outstanding of about Rs 15,000 crore. In these, the bank is either the sole lender or the consortium leader.
“We have commenced aggressive actions for recovery and have started monitoring directly the progress of enforcement actions in those high-value accounts,” said Venugopal Narayanan, head – legal, Bank of Baroda. “We would be recruiting about 50 more in-house lawyers this financial year to strengthen our legal team.”
Such recovery efforts are expected to bring back the bank's profits, erased by higher provisions against bad loans. In the January-March quarter of 2018, the bank incurred a net loss of Rs 3,102 crore. In the same period last year, it had made a net profit of Rs 154 crore.
According to Narayanan, a team of in-house lawyers are coordinating directly with branches to hasten the recovery process. The War Room Team, as the staff call it, interacts directly with the branches, dealing with advocates and enforcement agencies to ensure early settlement for the bank.
Besides, Bank of Baroda has also created a stressed asset management vertical, under which 15 existing stressed asset recovery branches and another 32 newly created regional stressed asset recovery branches are working. The bank is in the process of opening 10 more such branches.
The bank said it sees twin benefits—firstly, the regular branches will be relieved from the recovery responsibility, which will allow them to focus on acquiring new business and preventing fresh slippages of accounts to NPA. Secondly, since the bad loan accounts are with specialised recovery branches, the regular branches will be able to focus on chasing the NPA customers and could bring early recovery for the bank.
“The Legal War Room will monitor the progress of recovery actions made by those specialised branches, over and above the identified 380 accounts,” said Venugopal.
Moreover, the bank has started special grooming of officers on various modes of recovery before they are posted to the stressed assets branches.
Bank of Baroda is among the few government-owned lenders which are expected to improve their earnings in the April-June quarter, when most banks are likely to put up a poor show.
“With aggressive action there will be significant increase in recovery in the coming days, and we are hopeful,” said Narayanan, who is heading the legal team.
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