South-based non-public sector lender City Union Bank (CUB) mentioned it should in the interim deal with the emergency credit score line assure scheme (ECLGS), gold loans and restructuring of services, with a view to hand-hold debtors and hold slippages on the minimal.
“Our current growth is coming from disbursal of ECLGS loans and gold loans only. We will review this in Q4 and take a decision on how to go about the growth,” N Kamakodi, MD & CEO, informed an earnings name.
Between September 30, 2019 and September 30, 2020, the financial institution noticed a credit score progress of 6%. “Our current growth is coming from disbursal of ECLGS loans and gold loans only. The increase in disbursement of ECLGS and gold loans during H1of FY21 resulted in an improvement of CAR to 17.36% in Q2 from 16.29% in March 2020 on account of the zero percent risk weight prescription,” he mentioned.
CUB had sanctioned Rs 1,807 crore underneath ECLGS until September 30, 2020. Currently, gold mortgage stands at Rs 4,537 crore and it could go as much as 20%-22% of the portfolio. The financial institution is seeing demand for ECLGS as prospects are utilizing it as surplus capital or for repaying outdated loans.
Kamakodi mentioned the financial institution may obtain over 90% in assortment effectivity. After the moratorium interval, accounts protecting publicity of 94.53% to money credit score accounts (CC a/cs) or short-term loans and 85.70% to time period mortgage accounts, totalling 90.52% of publicity, obtained funds.
“ We have restructured 175 accounts to the tune of Rs 478 crore till September, of which 131 are under MSME amounting to Rs 455 crore and the remaining 44 in non-MSME amounting to Rs 23 crore. Further, 162 accounts amounting to Rs 430 crore under MSME and 124 accounts amounting to Rs 729 crore in non-MSME category are under process. Total restructuring will be 5-6%, and we expect the slippage ratio to be at 3% to 3.50% for the current financial year. Most of them will be accounts which had issues even before the Covid-19,” he mentioned.
“We will plan restructuring timelines according to the regulatory guidelines. We will give some of the sectors which are stressed, like hotels, maximum time period allowed by regulators,” Kamakodi mentioned.
CUB made a provision of Rs 115 crore in Q2 and Rs 100 crore in Q1 for Covid-related necessities. “Totally, we have a made an ad hoc Covid provision of Rs 317 crore to meet any future contingency, apart from Rs 23 crore provided in Q4 towards specific requirements. Though recoveries have shown some improvements, the same was not as witnessed during pre-Covid time. The recovery during Q2 improved to Rs 84.39 crore, against Rs 24.27 crore in Q1,” he mentioned.