Why Chandra Shekhar Ghosh is not worried about shortfalls in Q1 and expects Bandhan Bank to improve from Q2

economictimes.indiatimes.com:

Chandra Shekhar Ghosh, MD & CEO, Bandhan Bank, says “every year, in the first quarter, microfinance loans come down. It takes off from the second quarter, which is before the puja. This is a seasonality factor.

In last year’s first quarter, our microcredit book declined by Rs 5,000 crore. This year, in Q1, it declined from the March quarter by Rs 5,000 crore. The disbursement in last year’s first quarter was Rs 8,200 crore.

This year again we have disbursed Rs 8,000 crore. We are aligned on that first quarter trend. But every year from the second quarter before the pujas, this business starts showing growth and will continue to grow till March.”Talk about your special mention accounts – the SMAs. Your 1 to 30-days past dues and 30-60 days past dues bucket has increased. What is causing this pressure?No, if you see the seasonality of the business.

In the case of microcredit loans, there is a de-growth of the portfolio from March, which is Rs 5,000 crore. If there is a de-growth of the denominator, whatever amount will come on that, the natural rate of slippage percentage is shown to be very high. Normally, our collection efficiency in the March quarter is 98.5% and in the first quarter this financial year, it was 98%.

So there’s a fall of 0.5% and we are very confident that as per history, on a quarter-on-quarter basis by March, it will again reach 99%. This is a temporary situation.Apart from seasonality, your slippages have also gone up. What are the other factors which have led to the increase in slippages?The slippage is two-part.

One part is the slippage of Rs 568 crore as per the new circular of RBI, which is an ECLGS loan. The earlier rule was it will be paid by the government. But now they are saying the