ujjivan bank: loan recovery improving, says Ujjivan Small Finance Bank

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Ujjivan Small Finance Bank, which is going through a management crisis, said its loan recovery on the ground improved and its portfolio at risk declined in August.

The bank said its action plan to improve asset quality has started to bear fruit. The portfolio at risk (PAR) was reduced to 21.7% from 30.8% in June with a loan recovery of Rs 725 crore. The PAR was 25.2% in July. The lender’s collection efficiency improved to 95% in August from 93% in July, according to a regulatory filing with the stock exchanges.

Managing Director Nitin Chugh resigned on July 18 after the bank’s holding company, Ujjivan Financial Services, sounded the alarm over its alleged mismanagement of asset quality and human resources. The bank has seen a series of exits of senior and middle managers. Several members of the board of directors also resigned ahead of their term in office over the past year.

The gross ratio of non-performing assets rose further to 11.9% at the end of August, from 10.8% a month ago.

The bank said it was following a 100-day action plan for each line of business with a focus on reducing PAR and collecting bad debts with periodic monitoring and corrective actions. Emphasis is placed on initial installments and year of accounts to reduce PAR and further strengthen the collection team and legal recovery for small business loans and affordable housing loan portfolio.

Its gross loan portfolio edged up to Rs 14,334 crore at the end of August, from Rs 14,137 crore a month ago. The gross loan was Rs 15,140 crore at the end of March. Unsecured microfinance loans represent 67% of its total portfolio.

The bank’s restructured portfolio rose from Rs 769 crore to Rs 1,405 crore at the end of June.


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