Loan rejig boosts Canara Bank asset quality

NEW DELHI:  State-run Canara Bank has managed to keep its asset quality in check with the help of the one-time settlement (OTS) process and restructuring under the RBI’s Resolution 2.0 framework for Covid-19.

During the April-June quarter of the current financial year (FY22), the bank settled 89,000 loan accounts with an outstanding of Rs 1,950 crore through OTS route to recover bad loans worth Rs 1,300 crore. Under the Resolution Framework 2.0, the lender has restructured 3.51 lakh accounts worth Rs 13,234 crore. Post these restructuring, the bank has received about Rs 64 crore of payments into the account and Rs 35 crore as prepayment.

An OTS entails the creditor (bank) taking a haircut on the outstanding loan amount. “Restructuring of retail, MSME, and small business has helped a lot to our borrowers and we are hopeful that in the coming two to three months there will be more and more borrowers who will be repaying the instalments even though they are not due. We have also closed 89,000 OTS proposals,” said LV Prabhakar, MD & CEO, Canara Bank.

The bank’s gross non-performing asset (NPA) ratio improved to 8.5% of its loan book from 8.93% in March. Fresh slippages amounted to Rs 4,391 crore, or 0.69% of the book. Of the total slippages, 18-19% came in from the retail sector and around 55-66% from the MSME segment. 

However, there is significant stress in the micro, small and medium enterprises (MSME) accounts which were not fit for restructuring. Net profit jumped nearly three-fold to Rs 1,177 crore in the quarter ended in June.

IndusInd Bank net profit doubles 
IndusInd Bank on Tuesday reported a consolidated net profit of Rs 1,061 crore, showing a rise of 99.2% year-on-year for the quarter ended 30 June, 2021. The lender had posted a net profit of Rs 510 crore in the year-ago period Net interest income, or core income, increased 7.7% over the year earlier to Rs 3,564 crore, against the estimated Rs 3,569 crore. Other income rose 17.6% to Rs 1,788 crore. Asset quality, however, worsened, with gross non-performing asset ratio at 2.88% compared with 2.67% at the end of March 2021.