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Expect improvement in credit cost; recoveries to be better in FY22 versus FY21, says Bank of Baroda

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Bank of Baroda has posted its Q4FY21 earnings. The slippages have declined and asset quality has improved this quarter. Further, the bank's board has approved fundraising of Rs 5,000 crore. Sanjiv Chadha, MD and CEO, Bank of Baroda discussed the performance.

Bank of Baroda has posted its Q4FY21 earnings. The slippages have declined and asset quality has improved this quarter. Further, the bank's board has approved fundraising of Rs 5,000 crore. Sanjiv Chadha, MD and CEO, Bank of Baroda discussed the performance.
“We should be seeing further improvement in credit cost and that is why we are optimistic about the coming year,” he said in an interview with CNBC-TV18.
He expects the recoveries to be better in FY22 versus FY21.
“Our estimate is that the recoveries should be better this year compared to the last year,” he added.
This time the government and the Reserve Bank of India (RBI) have been proactive in making sure that the banks have the tools to mitigate the impact of the coronavirus pandemic.
“The RBI has brought out a new mandate in terms of restructuring. So, I believe that the banks should be able to mitigate the impact of the second wave of COVID-19,” he shared.
“I don’t think we are closing our eyes to the stress in the MSME sector which is definitely there. Our assessment is that we should be able to address that to a significant degree because of the ECLGS scheme and the restructuring options which are on the table,” he stated.
“There is no argument that the MSME sector is under stress and the recovery is going to be slow and painful,” he added.
In terms of net interest margins (NIMs), he mentioned, “I would still be cautious in terms of net interest margins. I expect margins to remain under pressure.”
“My prognosis is that the NIMs will move in a narrow range this year or at least for the first part of the year,” Chadha said.
For the entire conversation, watch the accompanying video
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