Don’t See ‘Any Risk’ Originating From NBFC Exposure, Says Bank Of Baroda CEO
Bank of Baroda is comfortable with its Rs 72,000-crore exposure to the crisis-hit non-banking finance sector.
“We don’t see any risk in these portfolios based on the repayment history and additional data secured through the continuous monitoring process,” Managing Director and Chief Executive Officer PS Jayakumar told BloombergQuint in an interview.
Nearly 85 percent of the government-owned lender's exposure to Infrastructure Lending & Financial Services Ltd. was through special purpose vehicles, and all projects barring one in the Middle-East region have obtained their commercial operation date certificates, he said.
We don’t see any risk in the completion of the remaining projects. Cash flows are being received. Accounts are all fully performing. Most of them are good quality assets. As a consequence, we feel, the downside risks to SPVs are limited.PS Jayakumar, MD & CEO, Bank of Baroda
Here's what else Jayakumar had to say about the bank's exposure to the troubled infrastructure financier:
- Have taken a certain amount of provision on the exposure to the parent company.
- These exposures are not NPAs, so we have provisioned as standard accounts.
- We need to watch these accounts.
- If the IL&FS parent company slips, then it is indeed negative news.
- Overall, will stick to the guidance on NPA reduction that we've given so far.
Watch the entire interview with Jayakumar:
Q2 Earnings Highlights
- Net interest income rose 20.7 percent year-on-year to Rs 4,492.5 crore
- Net profit increased 19.7 percent to Rs 425.4 crore.
- Net interest margin stood at 2.61 percent from 2.34 percent earlier.
- Provisions for NPA fell to Rs 1,466.6 crore versus Rs 1,759.7 crore in the June quarter.
- Gross NPA dipped to 11.78 percent from 12.46 percent in the previous quarter.
- Net NPA fell to 4.86 percent from 5.40 percent.
- Fresh slippages stood at Rs 2,281 crore, the lowest level in seven quarters.