L&T Finance's Restructuring under the OTR scheme stands around 1.50% of the overall balance sheet: Dinanath Dubhashi, MD & CEO
Dinanath Dubhashi, Managing Director & CEO, L&T Finance Holdings Ltd. talks about Q3FY21 numbers, recoveries and restructuring of the accounts among others during an interview with Swati Khandelwal, Zee Business.
Dinanath Dubhashi, Managing Director & CEO, L&T Finance Holdings Ltd. talks about Q3FY21 numbers, recoveries and restructuring of the accounts among others during an interview with Swati Khandelwal, Zee Business. Edited Excerpts:
Q: We saw strong disbursement this quarter but despite this growth, the NII and PAT have been low compared to last year. What led to this fall?
A: Our PAT is up by 10% as compared to Q2FY21, which has happened because of (i) disbursements; (ii) there has been a good improvement in NIMs and NIMS + Fees because we have maintained our NIMS and secondly earned good fees; (iii) cost of funds has gone down well and (iv)good control on the Gross NPA. So, these factors helped the PAT in being up by 10%. Now coming to your question specifically, NIMS has increased a lot, i.e. from quarter-to-quarter NIMS have gone up by Rs 200 crores and NIMS + Fees are up by that and this is despite, the book is not growing that much. The book has not grown due to two reasons (i) We were growing just on the chosen sectors and our real estate book has reduced. So, because of that overall book is not growing much and (ii) even the rural book has not grown much for a very good reason, it is a sweet problem to have in which we are disbursing a lot but the collection is much higher than it. Due to this, the asset quality is under good control but the book is not going up. So, it is a good problem to have and at some point, in time, the book will start going up.
Q: Update us about the recoveries that have happened in this quarter and where quick recovery was seen and which sectors are yet slow?
A: Various things are happening and I will tell you about various sectors.
Rural Sector - There is a welfare in the sector, money is available there and crops have been good.
Secondly, we have data-based and data analytics-based collection method and the complete industry has grown. The trends of the industry are good and we are doing better than the industry. In the case of tractors, the collections have been better than the pre-COVID levels. In two-wheelers, we have reached to the pre-COVID levels.
Infrastructure: There is liquidity in the infrastructure. The government has granted funds to the ACB due to which liquidity is available with the ACB. Toll collection has gone up by more than 100% of the pre-COVID levels. So, the collection from the infrastructure is good.
Micro-Finance: I would talk about the Real Estate first. In real estate those with good products having projects with 2-bed and below - the majority of our portfolio is there - collections have been good there. ESCROW collections have been more than the pre-COVID levels.
There are two sectors, where I will be a bit careful about which one is SME. Luckily, we have small exposure there, in which we have LAP portfolio there. SME's health is still not improving, which is very important for our country, forget about our company.
Q: But the major restructuring has come from the SME segment and rural will have least restructured accounts. What would you say and going forward, what kind of trends are visible here?
A: First of all, we are against overall restructuring. Our maximum restructuring - now we are aware of it because it was invoked till December 31, 2020 - under this one-time restructuring (OTR) scheme will be less than 2% of the overall balance sheet, i.e. it is around 1.50 per cent of the overall balance sheet and that is why we are very happy about it. Entire rural, we have zero restructuring, farm, two-wheelers, and micro-loans and zero means completely zero as none of the loans has been restructured because we believe that this segment is a bottom of the pyramid sector and if an exemption is provided to them then it harms the culture, so it must not be provided. We have restructured some corporate accounts. Around Rs 300-350 crores will happen for the SMEs and some Rs 1,000 crore will happen for some few corporate loans, which will be restructured. But overall, if it is less than 1.50%, I am pretty happy with it.
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