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• Banks have underperformed in the last six to nine months and the prime reason is exposure of banks to stressed sectors like aviation, power and infra.A nonperforming loan is considered to be either default or close to being default if a debtor fails to make the scheduled payments upon a sum of borrowed money for at least 90 days. BA Prabhakar, chairman and managing director at Andhra Bank says, "We have seen a very good recovery in the last quarter and also succeed in arresting new slippages."Andhra Bank has exposure of Rs 6500 crore to power sector. "We don't see any kind of defaults hapenning in this sector," he added.

• Q1: As you take charge at Andhra Bank, the last result (Q2) you had fairly big rise in NPLs, both on the gross level and on the net level. Gross NPLs rose from Rs 1176 crore to Rs 1987 crore and net NPLs rose from Rs 317 crore to Rs 1000 crore. Can you give us an idea how things have progressed in the third quarter. Did things get a little worse?

• A: Andhra Bank's results are supposed to be announced on 30th of this month. So I really can't share much of information on NPL front. But we have seen a very good recovery in the last quarter and we have been able to by and large arrest the new slippages. Overall, it is not going to be very negative for the market.

• Q2: Can you share some figures on the kind of exposure you have to various stressed sectors, for instance power?

• A: We do have exposure to power sector of about Rs 6,000 crore which is roughly about 7-8% of our total advances but these are all projects which are still under implementation so we will have more clarity on that once the year completes. Perhaps the CODs in most of these units will take place by end of 2012 and middle of 2013. Right now we do not see a big problem there. The implementations of these projects are on course. The only issue is that these companies will have to address about the fuel linkages which I think they still have another one year's time to sort it out.

• Q3: Have you got a request from any of these power companies or from the State Electricity Boards (SEBs) for restructuring any of the loans up until now?

• A: No. None of them has requested for any restructuring of the loans because it is too early as I said. These projects are still under implementation and they are by and large in line with the implementation schedule. So there is no need for considering any restructuring at this stage.

• Q4: There was news of Lanco unable to service its loan because the Karnataka SEB is not paying up and this is a constant problem of receivables piling up. GMR Energy told us that they have about Rs 700 crore of receivables due from various SEBs. Do you see that sector giving you a little more worries not necessarily SEBs they may pay up their interest but as in the case of Lanco we know that they have not been able to pay even on the 91st day we understand?

• A: What I read from the press is that the Lanco could not pay their servicing obligations for the month of January so which is really not 91 days past due has not happened. They still have some time maybe another 60 days to recover those debts and keep the account standard.

• In any case if there is a delay in realization of receivables and as long as the receivables are of good quality the banks can always consider working capital requirements to take care of that mismatch in the cash flow. It should not be a serious worry for the banks unless we see that the electricity boards and the distribution companies are not going to pay for 90 days -120 days which I think maybe on an ongoing basis maybe very-very unlikely.

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