Attributed to said Dr. Samantak Das, chief economist

 Attributed to said Dr. Samantak Das, chief economist
and head research and REIS, India, JLL

Uncertainty, resilience, and growth prompt status quo of policy rate

The unexpected global headwinds propelled by the new Covid-19 variant to the economic recovery prompted Reserve Bank of India to maintain the policy rates. RBI has kept the policy rate unchanged for the ninth time as it has been trying to support growth and rein inflation. Indian economy grew better than expected by posting 8.4% growth during Q2 FY22 indicating the strength of the economy. 

The accommodative stance and gradual normalisation measures also signal that economy is on the firm path of growth. Indian economy has demonstrated its resilience to uncertainty in the past and it is expected deal with it more prudently in future.

The growth registered by the real estate sector in Q3 2021 is likely to continue and to end this year on a positive note. In Q3 2021, residential sales witnessed an upward trajectory, increasing by 65% on a sequential basis. This sector is expected to benefit from a regime of low mortgage rate, coupled with duty waivers, realistic property pricing and attractive offers leading to affordable synergy.

Dr. Samantak Das, Chief Economist and Head Research & REIS, JLL on the monetary

                             Dr. Samantak Das, Chief Economist and Head Research & REIS, JLL
                                            on the monetary policy that was announced today

RBI has upheld its accommodative stance and kept the repo rate unchanged at 4% during the monetary policy committee meeting held today. ‘Strong and sustainable growth’ continues to remain the cornerstone of the Central Bank’s philosophy while it takes into cognizance the current rising inflationary trends. Citing the high inflation levels to be transitory in nature driven by short term supply side constraints, the Bank draws attention to the promising high frequency indicators such as consumption, investment and external demand which are regaining traction as the economy is opening up in a phased manner.

 With the concerns of the second wave ebbing supported by aggressive ongoing mass vaccination, broad-based policy support, normal monsoons, likely easing of supply side issues, RBI maintains its growth forecast for FY 21-22 at 9.5%. As the economy gradually gains foothold in the aftermath of the receding impact of the second wave, RBI has indicated greater confidence in the resilience of the Indian economy.

 Green shoots in the residential sector have emerged in tandem with the gradual improvement in the economic environment as businesses reopen. Prevailing lower home loan rates supported by RBIs policy rate stance, stable prices and attractive payment plans and schemes of developers are aiding the translation of pent-up demand into sales. If the downward trajectory in COVID-19 cases is sustained, the sector is expected to make a healthy recovery in H2 2021.

RBI Monetary Policy Quote From Our Clients

“RBI’s MPC expectedly stood pat on policy rates and reiterated accommodative stance as long as necessary to ensure economic activities are fully supported for durable recovery despite second wave of Covid-19 cases. The central bank retaining its 10.5% GDP growth forecast for FY22 shows faith in contribution to economic revival by key sectors and its liquidity measures along with bank lending to NBFCs being extended till September 30, 2021 is an acknowledgement of the systematically important role NBFCs have played in lending to the last mile. We remain steadfast and true to our promise of 

‘Containing fresh infections and boosting vaccinations are the 2 important steps to counter the socio-economic fallout of the pandemic. The pace of vaccination drive must be increased many folds and should cover younger population too. 

 

By keeping the repo rates unchanged, RBI has maintained an accommodative stance. The RBI Governor’s assurance to provide adequate credit by ensuring ample liquidity & announcement of Rs 10,000 Cr addl. liquidity to NHB must be passed onto the real estate  as the sector has been struggling to source funds for projects.

 

Real Estate sector is one of the key drivers of the economy and needs multi-faceted support from the Central bank and the Government to recover and bounce back to pre-COVID levels.’

Shriram Transport Finance

Please find below monetary policy views of  Mr. Umesh Revankar, Vice Chairman & MD, Shriram Transport Finance.

“RBI’s first monetary policy of FY22 was on expected lines with rates unchanged and accommodative stance retained. The Governor’s underlying commentary was dovish with continued priority on supporting economic revival measures through ample liquidity to all productive sectors. Recognising the key role played by NBFCs in making credit available to the last mile, on tap TLTROs and bank lending to registered NBFCs for on lending to priority sector has been extended by 6 months to September 30, 2021 and this will be particularly useful in supporting & nurturing financial needs of rural economy and semi-urban businesses, micro/small/individual operated businesses amid the current Covid-19 protocols.

ICICI Securities

Views of Ms. Anagha Deodhar – Chief Economist, 

ICICI Securities on the RBI Monetary policy

  

Quote

 

The MPC’s decision to pause and maintain accommodative stance is along expected lines. However, it retained GDP growth projections for FY22 at 10.5% despite large stimulus in other countries and its potential impact on global growth. In this policy, the biggest announcement was GSAP 1.0 under which the RBI plans to buy government securities worth Rs 1trn in Q1FY22. Along with GSAP, the RBI also announced extension of several liquidity facilities. Together, these measures are aimed at keeping financial conditions benign, ensure orderly evolution of the yield curve and supporting the nascent recovery.

RBI stays put to aid in maintaining real estate sector

RBI stays put to aid in maintaining real estate sector recovery | Ramesh Nair, CEO and Country head, JLL India

 RBI stays put to aid in maintaining real estate sector recovery

“Higher than expected recovery in Q2 FY 21 GDP reflects the resilience and robustness of the Indian economy. RBI’s decision to hold the policy rate and accommodative stance to revive growth on a sustainable basis augurs well for the economy. This is in spite of the fact that inflation for Apr to Oct 2020 is hovering above the higher limits of RBI’s inflation target.

 The decision to maintain the policy rate was in line with the real estate sector’s expectations as the sector is just recovering and is yet to bounce back to Pre-COVID-19 levels. Residential real estate witnessed initial signs of recovery with sales increasing by 34% in Q3 2020 over Q2 2020. 

 The RBI’s decision to hold the rate will help homebuyers to avail the benefit of the prevailing lowest mortgage rates. Green shoots of recovery armed with other incentives such as stamp duty reduction in some states and the flexibility of developers in offering best prices/payment schemes will help in further improving home sales.

Hinduja Group welcomes RBI report on

 Hinduja Group welcomes RBI report on Ownership Guidelines in the Indian Private Sector Banks

The Chairman of the Hinduja Group of Companies (India), Mr. Ashok Hinduja has welcomed the Reserve Bank of India Internal Working Group’s report on the Review of Extant Ownership Guidelines and Corporate Structure of Indian Private sector Banks (Mohanty Report).

He said “The Working Group has taken a timely and bold stand by proposing a uniform regulatory framework for the entire banking system, dispensing with the regulatory arbitrage available between banks, NBFCs, small finance banks and payment banks. Like in many other fields, we should move to a One Nation, One Banking Regulatory Framework if we are to move towards  realizing our aspiration to be a 5 trillion $ economy. Solid banking apparatus is a must”.

 Shareholder equity has to be the first line of defense in a robust banking system. “The Report rightfully puts a greater onus on the promoter-shareholders to exercise oversight through a higher shareholding limit of 26%, with commensurate voting rights. It helps strengthen the institutional framework by ensuring the promoter responsibility with more skin in the game, Supervisory stance for large conglomerates, including consolidated supervision will ensure the necessary check and balance in the system.”, Shri Ashok Hinduja noted.

Striking a note of caution, “Ring fencing the banking sector from a myriad of emerging risks has to be a constant endeavour, and I am certain the Reserve Bank of India will exercise a continuous vigil as it has done in the past. We hope the RBI will be able to implement these guidelines within a specified time frame. With the past policy interventions and this forward looking guidelines, undoubtedly the year 2020 belongs to RBI” he said.

IDBI Bank reports 125% increase in

 IDBI Bank reports 125% increase in Net Profit at ₹ 324 crore for Q2 FY 2021

Highlights of Q2 FY 2021 (Quarter ending September 30, 2020) Financial Results

Major Highlights

• Bank reports Net profit of ₹ 324 crore  for Q2 FY 2021 against net loss ₹3,459 crore  for Q2-FY 2020
• Bank registers Profit Before Tax (PBT) of ₹ 665 crore for Q2 FY 2021 against Loss Before Tax of ₹ 4,632 crore for Q2 FY 2020.
•  Operating Profit for Q2 FY 2021 is ₹ 1,246 crore , YoY growth of 23%.
•  NII at ₹ 1,695 crore for Q2 FY 2021, YoY growth of 4%.
•  NIM at 2.70% for Q2 FY 2021,   YoY growth of 37 bps.
•  CASA ratio at 48.33%, YoY growth of 346 bps
• Net NPA at 2.67%. CRAR at 13.67% 
•   PCR stood at 95.96%.
  

Operating Performance

• Net Profit reported for Q2-2021 is ₹ 324 crore as against loss of ₹ 3,459 crore for Q2-2020. Net Profit for Q2-2021 has improved by 125% against ₹ 144 crore reported for Q1-2021.
•  PBT improved for Q2-2021 to ₹ 665 crore as against loss of ₹ 4,632 crore for Q2-2020. PBT for Q2-2021 has improved by 52% against ₹ 438 crore reported for Q1-2021.

• Operating profit for Q2-2021 improved by 23% to ₹ 1,246 crore as against ₹ 1,009 crore for Q2-2020.Net Interest Income (NII) for Q2-2021 improved by 4% to ₹ 1,695 crore as against ₹1,631 crore for Q2-2020
•  Net Interest Margin (NIM) improved by 37 bps to 2.70% for Q2-2021 as compared to 2.33% for Q2-2020
•  Cost of Deposit improved by 76 bps to 4.41% for Q2-2021 as compared to 5.17% for Q2-2020
• Cost of Funds improved by 80 bps to 4.73% for Q2-2021 as compared to 5.53% for Q2-2020.
• ·        Non-Interest Income to Total Income improved to 18.61% for Q2-2021 as compared to 16.57% for Q2-2020.
•   Cost to Net Income Ratio has improved to 54.96% in Q2-2021 from 62.11% in Q020.

Business Growth

• CASA increased to ₹ 1,08,217 crore as on September 30, 2020 as against  ₹ 1,04,027 crore as on September 30, 2019.

• Share of CASA in Total Deposits improved to 48.33% as on September 30, 2020 as against 44.87% as on September 30, 2019.

• The composition of Advances portfolio Corporate V/s Retail was realigned to 42:58 as on September 30, 2020 as against 47:53 as on September 30, 2019.

Asset Quality

• Gross NPA ratio improved to 25.08% as on September 30, 2020 as against 29.43% as on September 30, 2019 and 26.81% as on June 30, 2020.

•   Net NPA ratio improved to 2.67% as on September 30, 2020 as against 5.97% as on September 30, 2019 and 3.55% as on June 30, 2020.

• Provision Coverage Ratio (including Technical Write-Offs) improved to 95.96% as on September 30, 2020 from 91.25% as on September 30, 2019 and 94.71% as on June 30, 2020.

Capital Position

• Tier 1 improved to 11.06% as on September 30, 2020 as against 9.52% as on September 30, 2019.

• CRAR improved to 13.67% as on September 30, 2020 as against 11.98% as on September 30, 2019.

•   Risk Weighted Assets (RWA) reduced by 6.27% to ₹ 1,57,323 crore as on September 30, 2020 as against ₹ 1,67,842 crore as on September 30, 2019. Credit Risk weighted assets reduced by 6% to ₹ 1,28,087 crore from ₹ 1,36,789 crore as on September 30, 2019.

COVID 19 Impact

• ·        In accordance with the RBI guidelines relating to COVID-19, the Bank has granted a moratorium on the payment of installments and or interest, as applicable, falling due between March 1, 2020 and August 31, 2020 ('moratorium period') to eligible borrowers classified as Standard, even if overdue, as on February 29, 2020, without considering them as restructuring. Bank has made COVID-19 related provision of ₹ 247 crore in March 2020 quarter and ₹ 189 crore in June 2020 quarter. Cumulative COVID-19 related provision was ₹ 436 crore as at September 30, 2020. The provision made by the Bank is more than minimum required as per the RBI guidelines.

• ·        RBI has provided for Resolution framework for COVID -19 related stress vide circular dated August 6, 2020. Bank has as a prudent measure made provision of  ₹ 270 crore towards the expected provisioning requirement for cases to be restructured under the Resolution framework.

• ·        Pursuant to Supreme Court interim order dated September 3, 2020, in the PIL case of Gajendra Sharma vs Union Bank of India & Anr, Bank has not classified any borrower account as NPA, which has not been classified as NPA as on August 31, 2020. Bank has however maintained provision against the same under standard assets provision.  However, if the Bank had classified borrower accounts as NPA after August 31, 2020, the bank’s proforma Gross NPA ratio and proforma Net NPA ratio would have been 25.20% and 2.81% respectively.

Significant Developments during Q2 2021

• ·        IDBI Bank has launched Banking Services 24X7 on WhatsApp on October 15, 2020

• ·        IDBI Bank has won the Trusted Brand Award in the Banks - Private category as adjudged in a consumer survey entitled Reader’s Digest Trusted Brand, 2020.

• ·        The Bank extended its social media presence by launching its official Instagram account “idbibankofficial”.

• ·        IDBI Bank announced the launch of six specialized gold loan branches branded as “IDBI Swarna Kalash”, by remodeling its existing branches at Bengaluru, Hyderabad and New Delhi.

• ·        IDBI Bank has executed an agreement to sell up to 27% stake in its Joint venture Insurance arm, IDBI Federal Life Insurance Company Limited (IFLI), to other JV partners as Age Insurance International NV  and The Federal Bank Limited.

• ·        IDBI Bank became the first bank to have implemented the new feature of document embedding facility with Letter of Credit (“LC”) / Bank Guarantee (“BG”) messages over SFMS platform of IFTAS (a wholly owned subsidiary of Reserve Bank of India) through its middleware application i@Connect-SFMS (CSFMS) developed by IDBI Intech Limited.

• ·        IDBI Bank announced the launch of two new variants of NACH Facility namely E-NACH and B-NACH for Corporate Customers at large, and more specifically for customers falling under BFSI segment. With this, the Bank will provide a Web based solution, to its Corporate Customers, to facilitate their interbank, high volume, electronic transactions which are repetitive and periodic in nature. It is a step towards adding one more product in the Digital kitty of the Bank, for its Corporate Customers.

 The Board of Directors of IDBI Bank Ltd. (IDBI Bank) met in Mumbai today and approved the financial results for the Quarter ended September 30, 2020.

Views of Mr. R.K.Gurumurthy

 Views of Mr. R.K.Gurumurthy, Head – Treasury, Lakshmi Vilas Bank 

on the RBI Monetary policy announcement today

 Quote

 Festivities begin in bond street earlier than one expected. RBI’s MPC’s new combination of external members announced an operationally more dovish policy without cutting rates and should be a watershed event for the broader economy.  In what is seen as a comprehensive approach to addressing both inflation and growth, the measures are a continuation of the accommodative stance we have seen over last 9 months.

 Repo and Reverse Repo rates remain unchanged. Special dispensation for HTM holding extended until March 2022 with a provision to buy Government securities until March 2021 and hold the same in HTM to an extent of 22% of NDTL. OMO amount increased to 20k per auction, TLTROs made an on-tap facility and end-use is sector specific with thrust towards NBFCs. Current spurt in retail inflation considered transient and RBI sticks to earlier estimates and is optimistic of containing within its forecast range. Most creative and unconventional is the announcement of OMO Purchases of State Development Loans. This will ensure the states’ borrowing program is non-disruptive and the cost remains anchored to broader market realities.   Other key measures include linking risk weight for home loans to LTVs and making RTGS a 24x7 payment system on the same lines of NEFT.

 The policy measures recognize the growth risk the economy faces and the imperativeness of providing liquidity for growth.  Recent measures and the cut-offs in auctions that RBI was not comfortable with higher yields and today’s policy reinforces that thought. Once inflation, which remains a supply-side disruption currently, softens, RBI should be willing to cut rates and we expect atleast a 35 basis cut this FY. The decision to hold rates steady would also help to protect NIMs of Banks as a majority of the loan book is linked to the Repo or other floating benchmarks.

Views of Mr Umesh Revankar MD and CEO

 Views of Mr. Umesh Revankar, MD and CEO, Shriram Transport Finance on monetary policy

RBI reiterated its accommodative stance to continue for as long as necessary while keeping rates unchanged, as broadly expected. The focus has been on easing financial conditions, keeping liquidity very comfortable in the system and reducing the cost of money through on-tap Rs. 1 lakh crore TLTROs and OMOs in state development loans. 

Sectors of economy like FMCG, agriculture, autos and warehousing among others have been more resilient than others in Q2 and this augurs well for transport industry that ensures last mile connectivity. RBI’s policy measures will have a positive impact for those engaged in last mile lending as rural & semi-urban economy is continuing to show strong recovery.”

 

Views of Mr George Alexander Muthoot

Views of Mr. George Alexander Muthoot, MD,
Muthoot Finance - Monetary Policy

 Mr. George Alexander Muthoot, MD, Muthoot Finance - Monetary Policy

 Mr. George Alexander Muthoot, MD, Muthoot Finance.

 

“RBI’s status quo on rates was along expected lines but the MPC clearly delivered accommodative moves via non-interest tools. New measures such as on-tap TLTRO of Rs. 1 lakh crore among others will reduce the cost of borrowing for NBFCs and further ease access to liquidity for industry. 

Also, the announcement of rationalising risk weights for all new housing loans until March 31, 2022 and linking it only to LTV is a welcome move that reflects the central bank’s focus on catalysing credit flow and reviving the economy. The policy measures are expected to benefit even the underserved retail borrowers and SMEs which are integral to lifting economic activity.”

RBI maintains status quo on policy rates,

RBI maintains status quo on policy rates, real estate sector welcomes additional measures to boost home loan lending

 “RBI is clearly looking through inflation giving more priority to growth, bearing in mind that inflation is led by supply chain disruptions. India’s GDP contracted by 23.9 percent in the April-June quarter of 2020. But the future quarters are expected to be better with the RBI forecasting GDP to contract by 9.5% in FY 2021. Importantly, the Central Bank believes that GDP growth may turn positive by the fourth quarter.

 The headline inflation rate was recorded at 6.7 percent during April-July 2020 due to strong supply-chain disruptions. This is above the outer limit of RBI’s medium-term inflation target 6%.  The Central bank continues to maintain its accommodative stance to allow elbow room for further policy interventions if required.  Thus, the repo rates remained unchanged at 4%. So far, the RBI has slashed rates by 115 basis points this year to support the economy and real estate sector in particular, amid the COVID-19 pandemic.

 RBI has rationalized risk weights for all new home loans which will be availed until 31st March 2022. Unlike the existing system where it was linked to both size of the home loan and loan to value (LTV), it will now be linked to only LTV of home loans. This is timely and a step in the right direction and is expected to provide a fillip to housing loans, thus having a positive impact on the residential sector.”

IDFC FIRST Bank Q1 FY21 Profit after Tax at Rs. 94 crore

IDFC FIRST Bank Q1 FY21 Profit after Tax at Rs. 94 crore

CASA deposits grows 145% YoY; CASA% reaches 33.7%; Capital adequacy reaches 15%

Financial results at a glance

The Board of Directors of IDFC FIRST Bank, the Bank created by the merger of IDFC Bank and Capital First recently, in its meeting held today, approved the combined audited financial results for the quarter ended June 30, 2020, as summarized below.

Earnings

§   The Profit after Tax for Q1 FY21 is reported at Rs. 94 crore as compared to Loss of Rs. 617 crore for Q1 FY20.

§   Q1 FY21 Net Interest Income (NII) grew 38% Y-o-Y to Rs. 1,626 crore, up from Rs. 1,174 crore in Q1 FY20. Despite the COVID-19 pandemic and lockdown impact, the Q-o-Q NII grew by 4%.

§   Net Interest Margin (quarterly annualized) rose to 4.53% in Q1 FY21 from 3.01% in Q1 FY20.

§   Fee and Other Income (without trading gains) decreased 54% to Rs. 148 Crore in Q1 FY21 as compared to Rs. 321 crore in Q1-FY20 due to lower loan originations and reduced banking activity on account of COVID-19 pandemic and related lockdown throughout the country. The trading gain for Q1-FY21 was at Rs. 337 crore.

§   Total Income (net of Interest Expense) grew by 42% at Rs. 2,111 crore for Q1-FY21 as compared to Rs. 1,485 crore for Q1-FY20.

§   Pre-Provisioning Profit (PPOP) increased by 181% to Rs. 892 crore in Q1 FY21 as compared to Rs. 318 crore in Q1 FY20.

§   Without the trading gain, Core PPOP, which is the Core Pre-Provisioning Operating Profit (Total Income net of Treasury gains and operating expenditure) increased by 69% on YOY basis from Rs. 328 crore in Q1-FY20 to Rs. 555 crore in Q1-FY21.

§   The provision for Q1-FY21 was at Rs. 764 crore as compared to Rs. 1,281 crore for Q1 FY20 and as compared to Rs. 679 crore in Q4 FY20. In the first phase of moratorium, the Bank took COVID-19 related provision of Rs. 225 crore through the profit and loss account in the quarter ending on March 31, 2020. During Q1-FY21 the Bank has created additional COVID-19 related provision of Rs. 375 crore to further strengthen the balance sheet.

 Liabilities – Strong and Steady growth

§   CASA Deposits posted strong growth, rising 145% YoY to Rs. 23,491 crore as on June 30, 2020 as compared to Rs. 9,594 crore as on June 30, 2019.

§   CASA Ratio improved to 33.74% as on June 30, 2020 as compared to 14.57% as on June 30, 2019.

§   Core Deposits (Retail CASA and Retail Term Deposits) increased 139% to Rs. 39,872 crore as on June 30, 2020 from 16,672 crore in June 30, 2019. This signifies the sticky and sustainable nature of the growing deposit balance.

§   The Fixed Deposits of the Bank has been assigned the highest rating “FAAA/Stable” by CRISIL.

§   The Bank has reduced its dependence on the wholesale and market borrowings which have been suitably replaced by the growth of core Retail Deposits. The borrowing through Certificate of Deposits (CD) of the Bank has reduced by 64% on YOY basis to Rs. 7,212 crore as on June 30, 2020 from Rs. 20,058 crore as of June 30, 2019.

§   As of June 30, 2020, the Bank has 503 branches and 417 ATMs across the country.

Loans and Advances – stable with growing retail %

§   Total Funded Loan Assets, gross of Inter-Bank Participation Certificates (IBPC), stood at Rs. 1,04,050 crore as on June 30, 2020, compared to Rs. 1,12,558 crore as on June 30, 2019 and as compared to Rs. 1,07,004 crore as on March 31, 2020. As the stated strategy the Bank focused on growing the retail loan book and decreased the wholesale loan book including infrastructure loans to reduce concentration risk on the portfolio.

§   Out of the total book mentioned above, Retail Loan Book increased by 26% to Rs. 56,043 crore as on June 30, 2020, compared to Rs. 44,642 crore as on June 30, 2019.

§   The Bank also acquired inorganic portfolio buyouts, primarily to cater to the PSL requirements where the underlying assets are retail loans. Retail loans including such inorganic portfolio constitute 61% of the overall loan assets.

§   Wholesale Loan Book, including Security receipts and Loans converted to equity reduced by 28% from Rs. 55,648 crore as of June 30, 2019 to Rs. 40,275 crore as of June 30, 2020 as the Large corporate loans and infrastructure loans continue to decline steadily as per the stated objective.

§   Within the wholesale segment as stated above, the Infrastructure loan book reduced by 34% to Rs. 13,416 crore as on June 30, 2020 from Rs. 20,322 crore as on June 30, 2019.

Asset Quality

§   Gross NPA of the Bank reduced to 1.99% as of June 30, 2020, as compared to 2.60% as of March 31, 2020.

§   Net NPA was 0.51% as of June 30, 2020, as compared to 0.94% as of March 31, 2020.

§   As of June 30, 2020, the Gross NPA % of the Retail Loan Book was at 0.87% as compared to 1.77% as of March 31, 2020 and Net NPA % of the Retail Loan Book of the Bank was at 0.24% as compared to 0.67% as of March 31, 2020.

§   The Provision coverage ratio on NPA accounts improved to 74.93% at June 30, 2020 as compared to 49.76% at June 30, 2019 and 64.53% at March 31, 2020.

§   The current NPA levels include the benefit of the moratorium provided to customers, including the overdue accounts which were at standstill.

§   Apart from the NPA, the identified stressed asset pool of the Bank, reduced by Rs. 943 crore during the last financial year. This stressed pool stood at Rs. 3,195 crore as of 30 June 2020 against which the Bank has done provisioning of Rs. 1,668 crore, 52% of the pool.

§   Apart from the NPA and Stressed Accounts as mentioned above, the Bank had also marked one large telecom account as stressed and provisioned 50% against the total outstanding of Rs. 3,244 crore (Funded – Rs. 2,000 crore and Non-Funded – Rs. 1,244

crore) in the quarter ending on 31 December 2019. The Bank continues to carry the same provision for the account as of June 30, 2020.

COVID-19 situation

§   During Q1-FY21, the nation-wide lockdown due to COVID19 pandemic stayed for the entire first two months of the last quarter and practically continues till now in the localized manner in some of the key business locations including main cities in India.

§   In the midst of such situation, the Bank continued to service its customers in all possible ways emphasizing on technology driven solutions and grew its business gradually, both for deposits and loans.

§   The branches of the Bank have remained open during this emergency time and the employees have efficiently helped their customers for all their needs in this situation, while remaining under the guidelines as prescribed by the Government Authorities.

§   The Bank introduced video-based KYC to onboard customers remotely in a completely touch-free way during the last quarter.

Impact on Disbursements

o   Retail disbursals were significantly impacted, especially during the month of April and May 2020, because of COVID-19 pandemic and related lockdown throughout the country. However, during June 2020, the disbursal revived once the lockdowns were relaxed up to an extent and has been in an improving trend since then.

o   The Emergency Credit Line Guarantee Scheme announced by the Government of India has been an excellent initiative to revive the businesses for the MSMEs and we have been participating to extend to our eligible customers under this scheme.

§   During May 2020, the RBI also announced the second phase of moratorium till end of August 2020 and the Bank accordingly extended moratorium to its eligible customers. For the second phase, till date, the Bank has provided moratorium to about 28% of its

customers based on the value, out of which 23% is in retail assets including rural portfolio and 35% is in the wholesale financing portfolio.

 Capital Position

§   As of June 30, 2020, the Net Worth of the Bank was Rs. 17,436 crore and the Book Value per share was Rs. 30.74.

§   Capital Adequacy of the Bank is strong at 15.03% with CET-1 Ratio at 14.58% as of June 30, 2020 as compared to Capital Adequacy Ratio of 13.38% and CET-1 Ratio of 13.30% as of March 31, 2020.

§   The Bank successfully raised Rs. 2,000 crore of fresh equity capital through preferential route during the quarter.

Mr. V Vaidyanathan, Managing Director and CEO, IDFC FIRST Bank, said, “We are happy to inform that we continue to progress well on all parameters as per the guidance provided for the bank. Further, we have liberally provided moratorium to customers who sought it, and our moratorium was about 45% last quarter. This has reduced to 28% now, which we expect to fall below 10% by August 31, 2020, based on the strong improving trend in collections we are experiencing.”