ET Now: We understand that your bank has quite a few MSME customers, what is it looking like for that segment, are you seeing any signs of stress post the localised lockdowns?
Dr N Kamakodi: The same time, last year, when the lockdown was actually started, it was quite panicky but things did quiet down, especially post the ECLGS being opened.
In fact, along with the first, second and third quarter we discussed and communicated to the market how we expected small and medium scale systems to work, going forward.
They are going through a phase where there is absolutely no cash flow and only expenditure, then phase two – when cash flow started but wasn’t sufficient to take care of repayments – then a stage when the cash flow improves to take care of the interest but not enough to take care of the principle and subsequently everything was back to normal at some point in December. From December onwards by and large 90% of businesses were back on track with almost 100% of pre-COVID level transactions and profitability. From then on, except for a few sectors – ones that suffer a recurring gestation period like the hospitality industry – by and large things have come back to normalcy.
While smaller lockdowns have started, we aren’t heavily affected since the bulk of our business is from the southern part of the country, particularly from Tamil Nadu.
Even though things are not looking great, they aren’t as bad as the first time around, we’ve learnt a lot from our experience from during the first lockdown and we don’t expect impact to be as bad this time around.
ET Now: If you could just give us a sense then in terms of asset quality as well, how is that panning out for you?
Dr N Kamakodi: As we’ve said before, and as our quarterly results will show, we expect to be having about three to three and half percent annualised slippage for the current year. I think we should be well within that limit and is what we expect at this point of time.