Private sector lender Bandhan Bank does not expect any requirement for microfinance loan restructuring going forward, though the lender may have to write-off some bad loans depending on situations.
For the fourth quarter last fiscal, the bank’s collection efficiency, other than non-performing assets (NPAs) accounts, returned to the pre-Covid level. At the end of the March quarter, for the emerging entrepreneurs business (EEB) segment, which is erstwhile microbanking segment, collection efficiency, excluding NPA, stood at 99%, compared with 97% at the end of the December quarter of the previous fiscal.
“In microfinance loans, there was no restructuring in Q4FY22. Going forward, there is no necessity of microfinance loan restructuring. Some technical write-offs could happen and it would depend on different factors,” Chandra Shekhar Ghosh, MD and CEO, told FE.
During the fourth quarter of 2021-22, the lender wrote off around 2,000 crore of bad loans, and it was entirely microfinance loans. In Q4, fresh slippages came down to1,365 crore from 3,441 crore in Q3FY22. Most of the slippages came from microfinance loans. “While around 90% of our NPA customers are paying, around 60% of customers of our restructured books continue to repay,” Ghosh informed. The bank’s asset quality improved as in absolute terms, as NPAs of the bank fell 9.75% year-on-year at5,757.76 crore in the fourth quarter of 2021-22, against 6,380 crore for the year-ago period. On a quarter-on-quarter basis, NPAs declined 39.02%, from9,441.57 crore during the third quarter last fiscal. On a year-on-year basis, the gross NPA ratio decreased 35 basis points to 6.46% from 6.81% in the year-ago period.
Bandhan Bank on May 13 reported a whopping 18-fold jump in its net profit to 1,902.34 crore for Q4FY22 from103.03 crore for Q4FY21 on the back of a rise in both interest and non-interest incomes and a fall in provisions. Provisions fell 99.69% y-o-y to 4.71 crore, compared with1507.69 crore for the corresponding period of FY21.
“Loan disbursement in the fourth quarter of FY22 was higher than the fourth quarter of FY20. That means it is coming back to the pre-pandemic situation. Disbursement happened because demands are there,” the MD said. The bank’s loan portfolio for Q4FY22 grew 12.9% quarter-on-quarter and 14.1% year-on-year.