IDFC may not require to make incremental provisions

Infra lender IDFC today said it may not be required to make any incremental provisioning to ring-fence the newly launched bank, saying the Rs 2,500-crore one-time provision made in the second quarter will take care of any risk going ahead.
"The asset book that is been transferred from IDFC to IDFC Bank, I don't envision any incremental provision. That's the reason we did one-off provision as well to make sure that from balance sheet perspective all known risks are provided," IDFC Ltd managing director and CEO Vikram Limaye told reporters here.
He, however, said that the bank will have to make standard provisioning that are required by banking regulations for any incremental asset.

In the second quarter, IDFC had transferred Rs 2,500 crore from its non-distributable reserves as loan provisions in the bank.
"In this (Q2) quarter financial statement that provisions have actually been made, which means we have transferred that amount to provisions for loans. We have routed that through profit and loss account," he said.
He said the bank, whose shares will be listed on November 6, will be starting on a solid footing.

"If we had to just stick to regulatory provision we would had to make no incremental provision. We have gone beyond that because the risk that we see surrounding certain power and gas based assets, unless we gave visible solution we thought it is prudent to make additional provision so that there is no over hang from an asset quality issue or overhang from provisioning," Limaye said.

He said the bank will monitor all the assets going ahead and hoped that there will be write-backs as assets get resolved.
On a consolidated basis, IDFC Ltd reported a net loss of Rs 1,469 crore in the quarter ended September due to one-time loan provision of Rs 2,500 crore for the bank.
Its net profit after tax stood at Rs 470.15 crore in the year-ago period. Gross non-performing loans stood at 3.2 per cent while net NPL was at 1 per cent.
On a stand-alone basis too, the company posted a net loss of Rs 1,411.38 crore in the quarter. Its average asset under management stood at Rs 70,223 crore.