A Fourth Of Bandhan Bank’s Loans Continue To Be Under Moratorium: CEO CS Ghosh

About a fourth of Bandhan Bank’s outstanding loan book continues to avail the moratorium, according to CS Ghosh, as the private lender is yet to resume normal collection of repayments amid the disruptions caused by the new coronavirus pandemic.

“We are expecting that normal collections should come by September. If worse comes to worst, it may take time till October,” the managing director and chief executive officer at the bank, told BloombergQuint over the phone. As on March 31, about 71% of Bandhan Bank’s loans were under moratorium as it could not collect repayments owing to the national lockdown.

The private lender’s collection efficiency was at 76% of the outstanding loans as on June 30. In its micro-banking division—Bandhan Bank’s largest business—68% of the customers are repaying normally now compared with 100% under moratorium as of April, according to an investor presentation.

Bandhan Bank also made standard asset provisions worth Rs 750 crore in the April-June period to protect its balance sheet from potential defaults in the near future. This is over and above the Rs 690 crore worth of provisions made in the three months ended March.

“According to our assessment, this provisioning should take care of any defaults arising out of the pandemic situation,” Ghosh said.

The provisions, however, caused the bank’s net profit to decline 32% year-on-year to Rs 550 crore in the quarter ended June. Its net interest income, or core income, rose 15% over the year earlier to Rs 1,811 crore.

Bandhan Bank’s outstanding loans stood at Rs 74,331 crore as on June 30, including about Rs 4,000 crore off-book lending and Rs 500 crore extended to it under the targeted long-term repo operations.

The off-book lending, according to Ghosh, refers to loan certificates that Bandhan Bank sold to other lenders so that they could meet their minimum priority sector lending targets, while the money raised through TLTRO was used to fund microfinance companies.

About 61% of the bank’s outstanding loans are toward micro-lending. Housing finance, micro, small and medium enterprises, gold loans and loans against deposits, form the rest of the loan book.

Bandhan Bank has been aggressively reducing disbursements to the micro-lending division. It disbursed Rs 2,859 crore to this segment in the quarter ended June compared with Rs 4,054 crore a year ago. For the rest of the year, Ghosh said the bank would continue to adopt a cautious growth strategy.

Bandhan Bank’s total deposits rose 35% year-on-year to Rs 60,610 crore as on June 30, with retail deposits contributing to 78% of total deposits.