Exposure to highly leveraged firms at 8%: Axis Bank

Bank says 1.5% exposure to these borrowers is classified as NPA, 5% restructured and 4% under 5/25 scheme

Axis Bank — the country’s third largest private sector lender — on Monday informed the stock exchanges that its exposure to ‘highly leveraged’ companies stood at eight per cent at the end of the December quarter.

“Eight per cent of our funded exposure to these groups is well distributed, with the largest group exposure forming around 1.5 per cent. Approximately 1.5 per cent of our exposure to these groups is presently classified as non performing assets (NPAs), another 5 per cent is restructured and around 4 per cent is under 5/25 scheme,” it said in a notice to the exchanges.

The lender also clarified that the term “leveraged groups” is not an Axis Bank classification. Instead, it is the eight large corporate groups that the investment community has identified and has been referring to as highly leveraged.

In a conference call after announcing December quarter earnings, the bank had mentioned that the Reserve Bank of India had recommended recognition of certain assets based on a systemic review as NPAs. The bank had undertaken this exercise in October-December quarter. As a result, its bad loans on the books had risen. As on December 31, the bank’s gross NPAs were Rs 5,724 crore against Rs 4,451 crore as on September 30. During the quarter, the bank added Rs 2,082 crore to gross NPAs, and recoveries and upgrades were Rs 156 crore. Net NPAs also increased to 0.75 per cent from 0.44 per cent in the corresponding quarter last year. The lender said it has not made any sale to asset reconstruction companies (ARCs) in the December quarter.

The lender also added that no sector has contributed in excess of 20 per cent of the net increase in the April-December period.

It also stated that the top four sectors in terms of incremental disbursements have been petroleum products, cement, power generation and, other metals and metal products.