IDBI expects 2% of small borrowers to opt for recast

Mumbai: Private lender expects just about 2 per cent of its individual and MSME borrowers to seek restructuring under the central bank window that allows borrowers with up to Rs 25 crore exposure to avail the facility.

It recast about 2 per cent of its overall book under the window available during the first Covid wave.

“Going by past experience, we don’t feel that more than 2 per cent of our total loans will be recast under this category,” Rakesh Sharma, the bank’s MD, told ET. “Our portfolio is very strong and 90 per cent of the retail loans are in the mortgage category, to highly rated borrowers.”

Sharma said he expects the Reserve Bank of India (RBI) to unveil more measures keeping in mind large corporates as the impact of the pandemic worsens.

Sharma added that in the first covid wave, the bank anticipated that restructuring could be in the range of 4-5 per cent but it was only 2 per cent — largely owing to chunky assets in the large and mid-corporate segment. The recast in the home loan and mortgage portfolio was 1.25 per cent under the earlier window.

The RBI on Wednesday allowed lenders to recast loans up to Rs 25 crore, this window is open until September. A surge of infections in the second covid wave has taken a toll on lives and livelihoods, with business momentum slowing. Collection ratios for lenders were down by up to 5 per cent in April, while cheque bounce rates were rising steadily.

“We are cautious but I don’t think it will be a big cause of worry, and now that the RBI has allowed recasting of loans, some of the borrowers that need hand-holding will be taken care of under this window,” Sharma said. “We don’t see a huge dent on slippages, the SMA2 (loans due beyond 60 days) portfolio could be under risk due to delays in loan collection, but my overall efficiency is 95 per cent; so I don’t see any immediate risk.”

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IDBI Bank exited RBIs prompt corrective action (PCA) framework after four years in March this year, posted profits of Rs 512 crore at the end of Q4. The net non-performing loan ratio improved to 1.97 per cent.



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