Private sector lender City Union Bank (CUB) has identified 1,326 borrower accounts (pre-COVID) for restructuring during the fourth quarter, CEO and MD N. Kamakodi said. He added that the time was not right to push credit growth.
“We are waiting for a better general economic environment, expecting better growth and lower non-performing assets,” he said.
To bring down NPAs, the bank has identified 102 accounts of ₹517 crore under MSME category and 1,224 accounts of ₹520 crore in the non-MSME category for restructuring in the fourth quarter. “Overall the total restructuring will be around 5-6%, which is well within range. As the regulatory instructions prohibit restructuring of stressed accounts during the pandemic period, we hope these would improve as we move forward. By FY21, we expect slippage ratio for the current financial year to be at 3% to 3-3.50%,” Mr. Kamakodi said.“We are pushing lot of efforts on recovery. But, we are not giving up. NPA recovery is going to be a major lever determining how we are going to maintain our profitability efficiency ratios in the absence of growth and favourable economic condition. Besides, we are also in discussion with certain customers, urging them to sell their non-core assets even before the accounts could become non-performing asset,” he said.
During the third quarter, CUB restructured 60 borrowal accounts of ₹321 crore and the total restructured MSME accounts as of December 2020 stood at ₹807 crore consisting of 233 borrowers. The present percentage of restructured accounts constitutes 2.21% of advances.
Asserting that the government-guaranteed ECLGS (1 and 2) schemes had boosted the spirit of the MSME and non-MSME sectors and businesses had started generating surplus, he said that sectors such as hotels, retail trade and passenger transportation were yet to reach normalcy. They are all mostly at sub-optimal operating levels, but improving steadily, he said.
The bank sanctioned ₹2,079 crore to 9,935 borrowers both under ECLGS 1 and 2 and disbursed an amount of ₹1,911 crore to about 8,791 borrowers. The ECLGS 2 consisted only of two borrowers with the amount being sanctioned at ₹22 crore. The total amount disbursed toward advances constituted 5.17%, he said.
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