You are here: Home » Markets » News
Business Standard

Bandhan Bank up 7% as Assam govt inks pact with MFIs for stressed borrowers

Brokerage firm ICICI Securities opines that this is positive for micro lenders and especially Bandhan Bank as recoveries are now assured by the state

Topics
Bandhan Bank | Buzzing stocks | Markets

SI Reporter  |  Mumbai 

bandhan bank

Shares of surged 7 per cent to Rs 337.95 on the BSE in intra-day trade on Monday after the Assam government on Friday inked an agreement with microfinance institutions (MFIs) to regularise stressed borrowers and repay the entire loans of highly stressed borrowers.

Also, as an incentive to good borrowers who did not default, the government will repay for each account Rs 25,000, or the loan amount, whichever is lower, to the MFIs. The total cost for the government will be a maximum of Rs 8,250 crore. The agreement was inked with Micro Finance Institutions Network (MFIN), the Business Standard reported. CLICK HERE TO READ FULL REPORT

Brokerage firm ICICI Securities opines that this is positive for micro lenders and especially as recoveries are now assured by the state.

In the January-March quarter (Q4FY21), Bandhan Bank’s asset quality witnessed significant deterioration with pro-forma Q4 slippages/ write-offs at 11 per cent/10 per cent (annualised), leading to >200bps decline in net interest margin (NIM).

Amid concerns around the asset quality due to waiver announcements in Assam and elections in Assam/West Bengal, the bank has reported slightly better overall collections at around 96 per cent (EEB-Microfinance at 95 per cent vs. 90 per cent in Jan’20 − after slip down in Assam − and 92 per cent in Dec’20 in value terms). We like Bandhan’s strategy to diversify the asset portfolio away from MFI (product as well as geography-wise) in the wake of rising adverse asset quality events while creating strong provisioning/capital buffers, analysts at Emkay Global Financial Services said in Q4FY21 result update.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Mon, June 21 2021. 09:51 IST
RECOMMENDED FOR YOU
.