Private sector lender City Union Bank Ltd. (CUB) will focus on emergency credit line guarantee scheme (ECLGS), gold loans and restructuring of facilities for now to aid borrowers and control slippages.
“During second quarter of FY20, we took our leg off the growth pedal as economy was not doing well,” N. Kamakodi, MD & CEO,” said during an analyst call.
“Our current growth is coming from disbursal of ECLGS loans and gold loans only,” he added. “To grow other segments would be a little risky now as customers have just come out of the pandemic,” he added.
“The focus will be on strengthening the balance sheet rather than profit and loss during FY21. We feel we should come out of the crisis with minimum impact,” he added.
As of September, the bank sanctioned ₹1,807 crore under ECLGS and ₹4,537 crore gold loans. Gross NPAs stand at 3.44% and net NPAs at 1.81%.
“We will review (this decision) in the fourth quarter.”
On restructuring, he said the bank would plan timelines according to the regulatory guidelines. CUB’s exposure to stressed sectors such as hotels and tourism is about 8% to 10%. As they have a long gestation period, they would be given additional time.
Stating that the ECLGS had boosted the spirits of MSME sector and businesses had started generating surplus, he mentioned the increase in disbursements under ECLGS and gold loans during the first half of FY21 resulted in an improvement of CAR (capital adequacy ratio) to 17.36% from 16.76% in March on account of zero percent risk weight prescription.
“We used to have our deposit growth in tune with our growth in advances. We have not pushed for growth because of COVID-19,” he said. The deposit position was kept muted in the first half of FY21,” he said.
Bank officials estimate slippage ratio for FY21 at 3% to 3.5%. Most of them will be accounts which had issues even before COVID-19.
