Bankers and analysts said the recovery in recovery is another indicator of improving consumer sentiment and heralding of better asset quality for banks in the near future.
“Two things have happened in the last quarter – one is the recovery from large corporates. bad debt “As we saw with the completion of the DHFL resolution, it is holding on,” said Rajiv Anand, Deputy Managing Director, Axis Bank.
“Two, retail payments that were impacted by the second wave of Covid have picked up as economic activity has resumed and customers have started making payments.”
Anand Dewan was referring to the recovery of Rs 37,400 crore made by lenders led by State Bank of India (SBI) in the last week of September in the Housing Finance (DHFL) proposal.
Financial creditors led by SBI had accepted claims worth ₹87,000 crore. Of this, SBI alone had an exposure of ₹7,267 crore to the distressed home financier. Part of this and other retail realizations have resulted in SBI’s total recovery, with the upgradation rising 83% to ₹7,407 crore in September, from ₹4,038 crore a year ago.
The story is similar for SBI’s private sector peers
, which in September 2021 recorded a two-and-a-half-fold increase in recovery and upgradation to ₹5,482 crore from ₹1,945 crore a year ago.
ICICI’s total recoveries and upgrades is less than ₹1,000 crore, just shy of the bank’s recovery of ₹6,463 crore in the entire FY21.
Axis Bank also more than doubled its recovery and upgradation to ₹4,757 crore in the second quarter ended September 2021, from ₹2,026 crore a year ago. Punjab National Bank (PNB) also reported almost three times in recovery and upgradation of ₹9,126 crore from ₹3,252 crore in the same quarter of the previous fiscal. Analysts said the trend is clearly in favor of less fresh slippages and a rising recovery for the rest of the fiscal.
Ashutosh Mishra, Head of Research, Ashika Stock Broking said, “The COVID hit portfolio, especially loans to individual and small enterprises and which were the main drivers of the slippage in Q1, is showing signs of a solid recovery. “Going forward, asset quality trends in the BFSI sector are looking promising as we do not expect slippages to increase like last year.”
Mishra said that the decline in slippage is also a good sign for the improvement in the asset quality of the bank.
SBI’s slippage declined to ₹4,176 crore in September 2021 from ₹15,666 crore in the quarter ended June 2021, as collection efficiency in retail loans improved to 95% after the end of the dynamics. Net NPA The ratio fell to 1.52%, from 1.59% a year ago.
ICICI too reported a fall in its net NPA ratio, which declined from 1.16% at the end of June quarter to 0.99% at the end of September quarter – the lowest since December 31, 2014.