Retail NPAs of top banks pile up owing to slippages in loan collection
ICICI's gross NPA additions included Rs 961 crores from the kisan credit card portfolio and Rs 1,130 crores from the jewel loan portfolio
Top banks like ICICI, Axis, and IndusInd have reported, that a bulk of their loans were classified as Non Performing Assets (NPA) in the retail category. Due to the second wave of the Covid-19 pandemic in April-May, many states had imposed lockdowns to curb the spread of the virus, hurting loan payment collections that had led to slippages rising in the retail loan portfolio.
Retail NPAs surge in top banks
India’s second largest private sector lender ICICI bank, accumulated Rs 6,773 crores as additions to the gross Non-Performing Assets (NPA) from the retail and business banking portfolios in the first quarter as compared to Rs 4,355 crores in the fourth quarter of the previous financial year (2020-21) on a pro forma basis.
The bank said that the retail and business banking gross NPA additions included Rs 961 crores from the kisan credit card portfolio and Rs 1,130 crores from the jewel loan portfolio. Both of which accounts to about 3% of the total loan portfolio as on June 30,2021. The total retail loan portfolio is 50% of ICICI’s total loan book.
In a post earnings call, Sandeep Bakshi, MD and CEO of ICICI Bank said that the measures imposed by the authorities to curb the spread of the virus, coupled with the unavailability of moratoriums to borrowers had significantly impacted the collections and recoveries in April and May and had also increased overdues and the gross NPA additions in the first quarter this year.
Axis bank also reported Rs 6,518 crores of gross slippages in the Non performing Assets (NPA) category during the first quarter this year as compared to Rs 5,285 crores as fresh slippages in the fourth quarter of the previous year.
According to a report by ICICI securities, Axis’s slippages were dominated by retail loans that stood at 85%. The third largest private sector bank said that collections fell in the first quarter as many of its employees and agents didn’t step out owing to the Covid-19 pandemic and the lockdown restrictions.
IndusInd bank also reported Rs 2,762 crores as slippages in loan collection from the retail segment during the first quarter of this financial year. Out of this Rs 2,342 crores came from the consumer loan book.
Banks said that collections dipped and led to higher slippages due to lockdown in April and May, but they expect asset quality in retail portfolio to improve once normalcy returns.