Bandhan Bank is not in favour of offering another loan repayment moratorium amid the second covid wave, but customers can seek a restructuring of their loan instalments, according to managing director and chief executive officer Chandra Shekhar Ghosh. While the complete impact of the second wave is yet to be felt, resulting in a small dip in collections, Ghosh expects business to bounce back in June. Ghosh also clarified that he is not a promoter CEO and that he has nine more years to go before he steps down as the head of Bandhan Bank. Edited excerpts from an interview:
How has the second wave impacted your business?
The second wave and movement curbs are restricted to urban and semi-urban areas, not in rural areas, where free movement is still possible. Data shows that it is the high-density population that are affected by the second wave. The first quarter of the last financial year (FY21) had a complete nationwide lockdown, but this time we are witnessing more localized lockdowns. The advantage is that businesses are still functional. Last time, people did not have any idea about the virus which, again, is not the case this time. Last year, especially in April-June, people were unable to gain access to villages and smaller localities. This time, however, there are no such restrictions on our collection executives.
Have you seen a dip in collections in April following localized lockdowns?
Collection efficiency has come down by 300-400 basis points (bps) from March, primarily because of complete lockdowns in certain areas. Some of my branches are in locked-down areas and therefore executives cannot go out for collections. That is the impact we have seen in April. However, I feel that in June we will be able to bounce back.
Do you think there is a need for a fresh moratorium for your borrowers?
If you see the microcredit part of our business, it is better off without moratoriums. While the policy can help borrowers at large, in our case people pay if they can come to our offices or where our collection executives are able to reach. In that sense, we are going to the business spot wherever it is permitted and collecting repayments. Wherever it is not permitted, we are not venturing out. That is better than a moratorium because under a blanket benefit nobody would want to repay. Therefore, such broad moratoriums are not of much aid to our customers.
Do you see a demand for loan restructuring from your customers this time?
Our customers, if they request for restructuring, we will give. We are not pressuring customers. If the customer is able to pay 50% of instalments, they are able to pay 75%, they are paying. There is no additional benefit that they will get.
There is always pressure on the customer if I’m able to pay, I should quickly pay so that my credit score does not get spoiled. We are not pressurizing them; 78% of NPA (non-performing asset) customers have paid in March.
Would you look at going slow on your microfinance lending given that the second wave is likely to hit the self-employed?
If you see the seasonality of business, the first two months are very slow. The bulk of growth in business comes in the second half, largely in the last quarter. If the situation improves in the first half, when our business is only 20%, the impact should not be that great. Having said that, one has to be cautious.
What is your outlook on credit growth?
Last year, business picked up in the last quarter and stood at 20%. We see that the credit growth this year will also not be different from last year.
RBI has come out with guidelines on tenure for promoter CEOs and other bank CEOs. What is your view?
Everything is dependent on god and the regulator. I’m not a promoter but a founder. As per recent regulations, a CEO has 15 years. I have completed only six years. My age is 60. So, you can calculate.
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