HDFC Bank writes off NPAs worth Rs 3,100 crore in the April-June quarter
The country’s largest private lender HDFC Bank’s bad-loan write-off doubled to Rs 3,100 crore from Rs 1,500 crore in the same quarter in the April-June quarter (Q1, or Q1) of 2021-22 (FY22). level doubled. of 2020-21 (Q1FY21).
It also offloaded its non-performing assets (NPAs) of Rs 1,800 crore in Q1FY22 to maintain a strong asset quality profile. In the last quarter, it had closed NPAs of Rs 1,000 crore.
Lenders removed the stress assets from the books after making full provisioning. Their right to recover dues from outstanding borrowers remains intact after the write-down.
In an analyst call over the weekend, bank officials said the slippages had increased as employees were unable to reach the market for collections made for most of the quarter (Q1FY22). The bank expects a better recovery in the current quarter (Q2FY22) as restrictions are lifted and economic activity picks up.
Its gross NPAs rose to 1.47 per cent in June, from 1.32 per cent in March and 1.36 per cent in June 2020.
To offload bad loans, the bank said the sale of NPAs would be an ongoing activity. But it will not have a standard value each quarter, indicating that the amount of bad debts sold can vary from quarter to quarter.
The lender will evaluate the portfolio and decide whether the bank can make more efficient collections through internal work or take available funds immediately and close the particular account.
Referring to the restructuring of accounts impacted by the Covid-19 pandemic, bank officials said the process has begun, with the actual restructuring being minimal in Q1. Activity is expected to pick up in Q2 of FY22, with most cases coming from the retail segment. The restructured loan book stood at 0.6 per cent in March and rose marginally to 0.8 per cent in June.
While considering restructuring, it will be seen whether the borrower has suffered a temporary setback due to the pandemic. The bank will restructure the account it deems the borrower can recover in two years (the maximum spelling allowed under the COVID 2.0 package). If people have lost their jobs, the bank will consider it.
The lender will not restructure accounts whose viability is in doubt. It will take the pain and move on, bank officials said.