See better asset quality, don’t expect major corporate account stress

Speaking to CNBC-TV18, Shantilal Jain, MD and CEO of Indian Bank, said asset quality was improving, so gross and net NPAs both declined. He said they saw no stress in a business book.

Indian Bank has released its second quarter results. The bank’s net interest margin improved on a year-over-year and sequential basis. Asset quality has also improved. Slippage has gone down quite a bit, it’s down about 20%.

Speaking to CNBC-TV18, Shantilal Jain, MD and CEO of Indian Bank said, “Our asset quality is getting better and better so both gross and net NPAs have gone down.”

“Last quarter, the slippage was around Rs 2,300 crore while the recovery was around Rs 3,200 crore and as a result, our gross and net NPAs declined. Going forward, we find that our SMA I and II have decreased significantly and the collection efficiency is maintained at 95%. So going forward, we see that the quality of our assets should also improve from here,” he added.

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In addition, management does not see any major stress on the part of the companies’ accounts. He said, “On the business side, the slippage was around Rs 200 crore in the last quarter, which was just one account. Otherwise, we see no stress in a business book, maybe Rs 10-20 crore, but not beyond the business side.

He added: “In the future, asset stress might come from the MSME book, but it won’t be much. So going forward, we see better asset quality.

Regarding loan growth, Jain said, “Our loan growth was 14% on an annual basis and basically in RAM we are growing 13%. Quarter-on-quarter, the bank consistently posts double-digit growth in the retail, agriculture and MSME (RAM) sector.

Watch the video to learn more.

Michael J. Birnbaum