Even as the second wave of Covid-19 infections affects collection efficiencies and hampers credit demand, Ujjivan Small Finance Bank is hopeful of a recovery by June-end.
“We are hopeful that now that cases have started to decline, the situation should become normal in another 30 days or by the end of June, and there would be a gradual restoration of business activities, including in rural areas,” said Nitin Chugh, Managing Director and CEO, Ujjivan SFB.
“This quarter is going to be challenging but we are hopeful that as things return to normal, hopefully by the end of the quarter, we should have three good quarters in the year,” he told BusinessLine.
The SFB reported 94 per cent collection efficiency in March this year, though it has declined to 89 per cent in April 2021.
“May collection efficiency is lower than that in April. We will be able to see some recovery by the month-end,” Chugh said, but added that the level of infections amongst customers and the bank’s staff is high compared to the last time.
Rising infections and localised lockdowns have also impacted credit demand.
“We are cautious in credit disbursement, but there has also been a collapse of demand, people are not willing to meet anybody and are not doing business,” he noted.
The bank’s disbursement for the fourth quarter of 2020-21 stood at ₹4,274 crore as against ₹3,254 crore a year ago.
On concerns about asset quality, Chugh said Ujjivan SFB did not exect gross non-performing assets to come down and it was well within estimates.
The bank’s GNPA shot up to Rs 1,070.6 crore or 7.07 per cent of gross advances as on March 31, 2021 as against 0.97 per cent on March 31, 2020.
“Our proforma GNPA for December was 4.84 per cent. The accounts which were already stressed by that time did not recover fully well, we offered restructuring to a part of the better quality portfolio but there were customers who were unable to pay,” he said, adding the lender had also highlighted areas such as Maharashtra, West Bengal, Assam.
“In our estimate, GNPA was not expected to come down, it is well within our estimate. If we had resorted to write-offs, it would have been in the range of 5 to 5.5 per cent,” he said.
The bank is also looking to launch gold loans as well as credit cards on a white label basis this fiscal.