Bandhan Bank expects there would be challenges in the next two-3 months in Assam just after the lender witnessed a extremely sharp dip in the collection efficiency in January, says managing director and CEO Chandra Shekhar Ghosh. In an interview with Mithun Dasgupta, Ghosh says the bank’s gross NPA ratio is not probably to rise additional. Excerpts:
In Assam, Bandhan Bank’s collection efficiency in the micro credit segment had stood at 88% at the finish of December. But it fell to 78% throughout the very first 16 days of January following the state govt passing the Assam Micro Finance Institutions (Regulation of Money Lending) Bill, 2020, and talks of a attainable waiver of micro loans by political parties ahead of the Assembly elections later this year. What is your exposure in the state and what is the outlook on the asset top quality going ahead?
In Assam, the collection efficiency came down in the very first 16 days of January. Now, it is stabilising a tiny bit. It shows that borrowers are prepared to repay. We feel there will be challenges in the next two-3 months.
Total microcredit group loan in the state is about Rs 6,917 crore, which is about 8% of the bank’s total advances. The repayment price for businessmen, who had taken loans throughout this pandemic, is greater in the state. We are now extremely conservative with regard to fresh lending.
During the third quarter, the bank’s total advances grew 22.6% year-on-year. What sort of credit development you are expecting in the fourth quarter?
In the final quarter, the credit development usually remains greater. Credit development will not be much less in the fourth quarter compared to the third quarter. We hope equivalent credit development in the March quarter as nicely as credit demand is returning.
The quantity of new clients coming to take loans was greater in the December quarter of FY21 compared with the year-ago period, specially in the micro-banking segment and partly in MSMEs.
What about the dwelling loan demand?
The demand for dwelling loans also enhanced compared to the September quarter.
The gross NPA ratio throughout the third quarter stood at 1.11%. What is the outlook on the asset top quality going forward?
The gross NPA ratio is unlikely to rise additional.