Bank of India says new loan restructuring policy is good

Indian Bank believes a better response to the restructuring of loans under the Resolution Framework 2.0 announced by the Reserve Bank of India earlier this month.

“We expect that this year we would probably be doing between 1.5% and 2%. This is the initial estimate. We’ll have to see how the appetite for restructuring grows, ”said Padmaja Chunduru, managing director and CEO of Indian Bank, when announcing the bank’s quarterly result on Friday.

Lender PSU revealed that only 0.72% of standard advances as of March 31, 2020 for retail, MSMEs, agriculture and business had been restructured in the previous framework.

With 19% of national advances in the MSME segment as of March 31, 2021, the bank saw a jump in new slippages in the segment worth Rs 2,921 crore for the fourth quarter of 2020-21 from Rs 801 crore per year since.

“The RBI has granted a waiver for the restructuring and the MSME which is the most vulnerable in our portfolio, we are planning a restructuring,” Chunduru said, adding that the bank expects the slip rate to stay close to a similar level of around 2.8% in the last year.

The Bank of India on Friday reported net profit of Rs1,709 crore for the quarter ended in March.

The lender had recorded a net loss of Rs 1,641 crore in the same quarter of the previous fiscal year 2019-20.

Sequentially, the bank had posted a net profit of Rs 514.29 crore in the December quarter of fiscal year 2020-21.

The gross PAD at 9.85% of gross advances as at March 31, 2021 was less than 11.39% as at March 31, 2020.

The bank’s board recommended a 20% dividend for 2020-2021.

Bearing in mind the negative impact of the second wave of the Covid pandemic, the RBI had announced another restructuring window for vulnerable borrowers – individuals, small businesses and MSMEs with aggregate exposure not exceeding 25 Rs crore as of March 31, 2021. subject to certain eligibility conditions. Restructuring in this context must be invoked before September 30, 2021 and implemented within 90 days of invocation.

With 19% of national advances in the MSME segment as of March 31, 2021, the bank saw a jump in new slippages in the segment worth Rs 2,921 crore for the fourth quarter of 2020-21 from Rs 801 crore in the corresponding period of the previous year.