Mumbai-based public sector lender, Central Bank of India is in the process of disposing the non-performing assets amounting to Rs. 102 crores.

The offloading, which covers 19 accounts from the different sectors will help the bank to clean up its balance sheet. S Sridhar, chairman and managing director, Central Bank of India, said, "It is a pilot project for us and the bank has not finalised the target for sale of NPAs in 2009-10. Based on the response, the bank would conduct such NPA sales every quarter."

The step has been taken considering the large accumulation of NPA in their balance sheet. Citing the reasons for the move, the senior official of the bank said, "We have made provisions for the last four-five years for NPA accounts in line with regulatory norms. The proceeds from the sale would help bolster our profit and loss and a part of it could be used to make provisions for fresh NPAs."

During the FY08-09, the net NPAs of the bank rose to Rs. 1,063 crore from the earlier figure of Rs.1,060 crore during FY07-08.

During the current fiscal, the bank is set to work on NPA management, asset quality monitoring and prevention of fresh slippages. The bank will also resort to loans recoveries, for which it will open asset recovery branches at various locations. Other methods include compromises, write-offs and third party sales.

In a similar move, United Bank of India has been considering to offload as many as 100 NPA accounts.

Another PSB, Canara Bank has put the offloading of 65 NPA accounts (with a realization value of around Rs 250 crore) on stay, after getting a tepid response from the asset reconstruction companies.

Amidst of the economic meltdown, most PSUs have been witnessing a decline in the NPAs, mainly due to loan restructuring, though NPA offloads can be citied as another reason with more banks taking similar move in near future.

A recent report released by the CARE Ratings, on the Indian Banking Sector, stated, "NPAs are suppressed under the shadow of restructuring." The report also indicated the possibility of new slippages from the restructured loans, if the economic slowdown continued over the next fiscal.