Bajaj Finserv managing director Sanjiv Bajaj on Wednesday extended support to HDFC chief Deepak Parekh’s view that the Reserve Bank of India should not extend the loan moratorium.
Speaking with CNBC-TV18 in an interview, Bajaj said, “I fully support what Deepak Parekh has said. We have now had a total of 6 months available for moratorium by September, and as we know, the economy has started picking up from last month at varying speeds because of local lockdowns creating issues, but it is picking up other than a few key sectors which we know hospitality, travel, entertainment are facing very high challenges. But most others have started at least doing okay. So, at a time like this, I also believe that it doesn’t make sense to extend a blanket moratorium.”
Bajaj Finserv MD further added that the RBI should allow one-time restructuring rather than extending the moratorium.
“Instead, allow a one-time restructuring, let lenders decide on the basis of each one’s own underlying cash flows, because eventually, we have to keep in mind that there is a cost to doing all this and somebody has bear that cost. A 6-month moratorium is long enough, beyond that will start creating a moral hazard that even reasonable quality borrowers will lose the habit of paying and we do not want that,” he said.
Speaking about credit cost, he said, “Our latest presentation talks of a Rs 6,300 crore number. Right now this is the best estimate the team can do, it is about a Rs 6,300 number for the year. You have to keep in mind that we took about Rs 900 crore in Q4 last year. So, Rs 7,200 crore is what we see at this stage.”
Bajaj also said that they are adequately capitalised with the Rs 8,500 crore raised last year. “We were fortunate that last year November we went and raised capital in Bajaj Finance. As you know, our two insurance companies do not need it, we have significant capital on the books over there from profits of earlier years, but Bajaj Finance, ideally we would have been raising money at this point of time, but I think we were just fortunate. We raised Rs 8,500 crore last year and with that our tier-I today is 23-24 percent. So, unless all hell breaks loose where we have bigger problems than a country and an economy, I think we are very comfortable,” he said.
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