V Vaidyanathan on how IDFC First Bank is growing@30% despite MFI business stress & infra loan account write-off
V Vaidyanathan, MD & CEO, IDFC First Bank, says the microfinance sector's delinquency has been going up and other than IDFC First, other banks have also been affected. The good thing is IDFC’s delinquency as compared to the rest of the industry, is much less. SMA or pre-NPA is only 2.5% as compared to 3.5% to 4% or maybe 2.7% to 4% for similar banks. Also, now 50% of the portfolio is insured and it will reach 75% by March ‘25.
Vaidyanathan also says that they have taken a big write-off on an infrastructure loan candidate who used to collect tolls from cars entering and leaving Mumbai. As the government has announced that no toll will be levied, this company was in dire straits. From next quarter, the name of this account will not be there anymore.
Good comes with the bad and for the quarter gone by, there is a lot of good, but there is a lot of bad also. What shall we start with?
V Vaidyanathan: We should start with the bad because people will want to hear what really happened this quarter and we need to explain.
So, why don’t you indicate to us what transpired and what caused stress for IDFC Bank for the quarter gone by?
V Vaidyanathan: This quarter, there is stress in the microfinance business, which is really in the news across the system now. Many things came together, the heat wave, the elections, a bit of over-leveraging in that segment because a lot of lenders wanted to lend to that segment. So, many things came together. There were also floods in Tamil Nadu.
So, a strange storm of events all came
