Pvt banks set aside over ₹17,000 cr for provisions
MUMBAI: Private banks in India have turned extra cautious amid widespread business disruptions from the coronavirus pandemic, with the top lenders setting aside more than ₹17,000 crore in provisions fearing a surge in bad loans after the six-month loan moratorium ends in August.
HDFC Bank Ltd, Axis Bank Ltd, Bandhan Bank Ltd, Federal Bank Ltd and ICICI Bank Ltd have made aggregate provisions of ₹17,146 crore in the June quarter. The figure is 9.17% lower than the ₹18,876 crore set aside in the March quarter but marked a 67% rise from the year-earlier period. This is despite a declining trend in loans under moratorium seen in the past two months.
The Reserve Bank of India (RBI) allowed lenders to offer a six-month moratorium to borrowers in a bid to provide relief to businesses and people.
The RBI’S Financial Stability Report released on Friday said the bad loan ratio of banks is expected to climb to the highest level in more than two decades as a protracted lockdown has severely hit businesses and left millions of people jobless, impairing their ability to repay.
Non-performing assets at banks may rise 4 percentage points to 12.5% of advances by March 2021, the highest since FY2000, under the baseline stress scenario, RBI said in its report.
To be sure, lenders continue to be apprehensive even as the percentage of borrowers under moratorium has started to decline significantly in the second phase of the deferment with an increase in repayments.
Lenders say they are unclear on the amount of stress that could come to their books post August 31, after the end of the loan moratorium.