NIFTY 50

IndusInd Bank's Romesh Sobti: We have seen significant recoveries in stressed accounts

Updated : October 03, 2019 03:47:24 IST

IndusInd Bank was down more than 3 percent on Thursday, making it the top Nifty loser. Romesh Sobti, managing director and chief executive officer of the private lender, in an interview with CNBC-TV18 talked about the reasons for the stock decline.

He said from a month ago period until now nothing really has changed apart from heightened speculation and conjecture and because of conjecture on a particular account — a housing finance company, the bank was obliged to inform the stock exchanges what the actual exposure to the entity was.

“As far as we are concerned, when we ended the last financial year, we had said that our credit costs would be range bound and that range was around 60 — give or take 10-12 basis points — and quarter one showed a trending — it was 14-15 basis points. Q2 also seems to be trending in same sort of way,” he said, adding “[I] would like to emphasize that nothing really has changed. In fact we had very significant recoveries in the so called stressed accounts. They were not stressed in our books because they are not overdue.”

Moreover, exposures in various sectors have remained constant. There has not been a residual loss because of so called stressed account, in fact, we have had significant recoveries, said Sobti, adding that there has been some conjecture and speculation on the higher margin businesses like commercial vehicle or micro finance institutions (MFIs) etc. “We just want to say that these portfolios are performing very robustly and well up to our credit standards. We see no adverse trends.”

On housing finance companies, he said: “Although I cannot talk of specific exposures, all I can say is that we are not seeing the stress which the market is assuming. In fact, we are seeing very significant recoveries and so to that extent because of recoveries the corporate book will not show the sort of growth that we normally show and none of them is even a day overdue with us.”

He added: “One of our big initiatives was the provision coverage ratio (PCR) which had fallen after one large infrastructure relationship we classified as NPA (non-performing asset) and we made large provisions for it that we told market also previously our aim is to take that PCR back to at least the 60s and there is good beneficial impact that it has come as a consequence of the tax savings. A large part of tax savings will help us to raise the PCR and you will start seeing it from this quarter itself.”

On deposit growth, he said that it was very strong in the last few quarters and has remained robust in this quarter because of the huge drive to raise retail fixed deposits. “We are getting Rs 5,000-6,000 crores of retail deposits every quarter. So deposit growth will show same sort of trending as seen in past,” he said, adding that the commercial vehicle portfolio continues to grow at over 20 percent.
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