Bandhan Bank expects to achieve around 21% year-on-year credit growth for this fiscal as well after posting similar growth last fiscal, says its MD and CEO Chandra Shekhar Ghosh. In an Interview, Ghosh tells Mithun Dasgupta that disbursement in home loan segment picked up in the second quarter compared to the first quarter this fiscal. Excerpts:
What kind of pick-up in credit demands have you seen so far during this festive season?
Ghosh: Festive season loan disbursement growth has come near to the last year’s festive season figure. And, it is 95% of the pre-Covid levels. This disbursement growth is related to credit demand pick-up in the micro-credit segment and rural areas. MSME credit demand has also improved. But, we are also very much conservative. In the third quarter, we could see further improvement in credit demands for MSME segment. Every time after Durga Puja all types of credit growth come. This time also, we have got that signal before the Puja.
Has disbursement in the bank’s housing finance business also seen a growth?
Ghosh: Disbursement in home loan segment also picked up in the second quarter compared to the first quarter this fiscal. For affordable housing loan, government support is also coming.
What type of overall credit growth you are looking at for this fiscal?
Ghosh: For this fiscal, we would like to achieve last fiscal’s credit growth. Last fiscal credit growth was 21% year-on-year.
Is collection efficiency improving for the micro-credit segment?
Ghosh: Collections have seen a steady improvement month on month. In micro-banking, our collection efficiency in September stood at 89%, and it rose to 91% in October.
In the second quarter, the bank’s non-performing assets (NPAs) in absolute term decreased both on year-on-year and quarter-on-quarter basis. What are the reasons that contributed to this improvement in asset quality?
Sunil Samdani (CFO): This was supported because of the loan moratorium as well as the Supreme Court order. But, having said that we have seen a lot of upgrade. The customers, who missed the payments in first quarter and the loans are becoming NPAs, are coming back. Clearly, the customers are coming back as they see opportunity in their businesses. They come to repay so that they can take fresh loans.
Going forward where do you see overall NPA position of the bank?
Ghosh: We would like to maintain this at the current level.
Don’t you see rising pressure on asset quality moving forward as moratorium on loan repayments ended on August 31?
Sunil Samdani (CFO): The impacts of moratorium crystallise in the next two quarters. We have already taken enough provisions, which is almost 2.8% of our total loan book. If there is any pressure, we can use these provisions. That is why we are confident of maintaining the NPA levels.
Net Interest Margin (NIM) for the second quarter stood at 8%, down 2 basis points from the year-ago period. What is the full-year guidance of NIM?
Ghosh: We expect to maintain NIM at around 8.2%.
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