Steep provisions drag IDBI Bank net NPAs below 0.5% in Q1
MUMBAI : Private sector lender IDBI Bank was able to restrict its net non-performing asset ratio to less than 0.5% in the three months through June, aided by a strategy to aggressively set aside provisions. The bank’s net NPAs stood at 0.44% of net advances as on 30 June, down 48 basis points (bps) from the previous quarter. Its gross bad loans were at 5.05% in the June quarter, as against 6.38% in the March quarter.
Additional provisioning has led to the bank reporting a provision coverage ratio (PCR) including technical write-offs of 98.99% in the June quarter. In the three months through June, IDBI Bank made additional provisions of ₹770 crore against NPAs at rates higher than those prescribed by RBI, “based on management assessment of the degree of impairment in various categories of advances". PCR denotes the percentage of bad loans for which a bank has set aside provisions.
Rakesh Sharma, chief executive, IDBI Bank, told reporters on Monday that the bank has made additional provisions as a prudent measure, and it has been following this policy to build strong buffers. “We are already at about 99% PCR and I don’t see much room from here. The bank is also focussed on recoveries from bad loans as well as those that have been technically written off to clean the balance sheet," said Sharma.
Meanwhile, IDBI Asset Management Ltd, IDBI MF Trustee Co. Ltd, LIC Mutual Fund Asset Management Ltd and LIC Mutual Fund Trustee Pvt Ltd entered into an agreement on 29 December to transfer IDBI mutual fund schemes to LIC MF. The bank said the Competition Commission of India (CCI) and Securities and Exchange Board of India (Sebi) approval for the proposed transfer of AUM was received on 23 March and 3 April, respectively.
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