The country’s largest private lender HDFC Bank’s bad-loan write-offs doubled to Rs 3,100 crore in the April-June quarter (first quarter, or Q1) of 2021-22 (FY22), from the level of Rs 1,500 crore in the same quarter of 2020-21 (Q1FY21).

It also offloaded its non-performing assets (NPAs) amounting to Rs 1,800 crore in Q1FY22 to maintain a robust asset quality profile. It had jettisoned NPAs worth Rs 1,000 crore in the last quarter.

Lenders knock off stress assets from books after making full provisions. Their right to recover dues from delinquent borrowers remains intact after the write-downs.

In an analyst call over the weekend, bank executives said slippages were elevated since employees were not able to get to the market for collections done for most of the quarter (Q1FY22). The bank expects to have better recoveries in the current quarter (Q2FY22) as restrictions are lifted and economic activity gathers steam.

Its gross NPAs rose to 1.47 per cent in June, from 1.32 per cent in March and 1.36 per cent in June 2020.

In a bid to offload bad loans, the bank said the sale of NPAs was going to be a consistent activity. But it will not have a standard value each qu­arter, indicating the amount of bad loans sold could vary from quarter to quarter.

The lender will evaluate the portfolio and decide on whether the bank can have a more efficient collection through internal work or take the money available instantly and close the particular account.

Referring to restructuring of accounts hit by the Covid-19 pandemic, bank executives said while the process has begun, the actual restructuring has been minimal in Q1. The activity is expected to gather pace in Q2FY22, with most cases coming in from the retail segment. The restructured loan book was 0.6 per cent in March and rose marginally to 0.8 per cent in June.

While considering restructuring, it will see if the borrower had a temporary setback due to the pandemic. The bank will restructure such an account it believes that the borrower can recover in two years (maximum spell allowed under Covid 2.0 package). If people have lost jobs, the bank will take a considerate view.

The lender will not restructure those accounts whose viability is in doubt. It will take the pain and move on, added bank executives.

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