Punjab and Sind Bank reports account of IL&FS Financial Services (IFIN) as fraud account to RBI – The Economic Times

Clipped from: https://economictimes.indiatimes.com/industry/banking/finance/banking/punjab-and-sind-bank-reports-account-of-ilfs-financial-services-ifin-as-fraud-account-to-rbi/articleshow/78833287.cms?utm_source=ETTopNews&utm_medium=HPTN&utm_campaign=AL1&utm_content=23

Federal Bank expects spurt in NPAs in next two quarters if economic conditions do not improve

Synopsis

As against the usual rate of Rs 300-350 crore in fresh slippages per quarter, the number may go higher by over 30 per cent if the economy continues to be challenging, its managing director and chief executive Shyam Srinivasan told PTI.

Federal Bank has said it fears a higher-than-normal accretion of non-performing assets (NPA) over the next two quarters from loans to small businesses and retail borrowers if economic conditions do not improve.

As against the usual rate of Rs 300-350 crore in fresh slippages per quarter, the number may go higher by over 30 per cent if the economy continues to be challenging, its managing director and chief executive Shyam Srinivasan told PTI.

He said the Rs 300 crore slippage number is excluding the corporate advances and made it clear that there is no large chunk corporate loan which it feels may slip into NPA.

The bank had reported slippages at Rs 3 crore for the September quarter but disclosed that the same number would have been Rs 237 crore if not for the mandates on stress treatment. It had also set aside money as provisions as per the higher number.

Speaking about the rise in slippages it expects, Srinivasan explained that many accounts in the retail, agricultural sector and small businesses may not be able to meet the criteria laid down under the one-time restructuring framework announced by the Reserve Bank of India.

He said the bank will be proactive in recognising such slippages and will set aside money as credit provisions as and when the assets slip into NPA, which may lead to an increase in credit costs.

The lender had decided to set aside additional provisions for COVID-related stress in the September quarter, which was among the reasons that dragged its net profit down by 26 per cent despite the operational profit being at an all-time high.

The bank is expecting to close FY21 with credit growth of up to 9 per cent, he said, adding that it will accelerate to the normal levels of between 15-18 per cent from FY22 onward.

Growth in corporate credit is low in the current fiscal, but the same in retail and small business loans is higher, he said.

The bank does not fear any impact from the dip in remittances by the diaspora, Srinivasan said, pointing out that it has been increasing its market share in such flows over the last few years and its share now stands at 17.5 per cent.

The growth in both the non-resident Indians and domestic deposits has been handsome in the September quarter and the share of the low-cost current and saving account deposits has crossed 30 per cent, he added.

The bank is targeting to launch its credit card offering by 2021, Srinivasan said.
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4 Comments on this Story

TK JOHN8 hours agoLooking at the share price of Federal Bank at 55 rupees, it is as if the NPA crossed 30 percent, CEO committed suicide, 70% of employees died of Covid 19, and kerala under flood water for the last 6 months..
Srinivasan Vedantam11 hours agoSee defaulters pay hectic some as fees in insolvency proceeding or any proceedings but Banks could not pay reasonable salaries to workers and executives as compared to corporate defaulters.
Srinivasan Vedantam11 hours agoIt is normal if industries and commerce fail Banks will go with. But not reverse as Banks are regulated more on each segment interest rates service charges and public support while industries make a life while there is sunshine and blame Banks when there is a set back. They can withstand any eventual failure provided keep adequate reserves and the money not siphoned out.

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