Interview: Romesh Sobti, MD & CEO, IndusInd bank

IndusInd Bank witnessed a robust growth in its top line and the operating income during the March quarter as well as the previous financial year. However, the provisioning against exposures to IL&FS affected the bank’s bottom line, Romesh Sobti, MD & CEO, told reporters while announcing the bank’s results on Wednesday for the January-March quarter of FY19.

Talking specific about IL&FS, there was some provisioning that was dome in the last two quarters. How much provisioning was done in this quarter?

The past two quarters were contingent provisions and this was specific provision, but talking about the numbers, we provided `1,120 crore plus `153 crore of interest reversal which aggregate to `1,273 crore.

Bulk of the slippages came from IL&FS, could you tell us about the remaining slippages?

Apart from IL&FS, the slippages have been in the negative, that means we have had more recoveries than slippages. The slippages amounted to -0.6% of the loan book. Recoveries for the quarter amounted to `700 crore. Of the total provision against IL&FS, we have written off `1,000 crore as we got a tax benefit on the write-offs.

There is a rumour that the bank is not showing its stressed assets properly, there is some amount of the stressed assets which is still hidden. Can you say that IL&FS was the only trouble and the worst is over?

First of all, it should have affected our credit cost, but that is 90 bps, which is low. Potential stressed group is at 1.9% of the loan book of `1.8 lakh crore. Stressed accounts are best reflected in overdues, and our SMA 1 and SMA 2 stand at 0.32% and 0.34%, respectively. Only SMA 2 – which is the 60 to 90 days overdue – is stressed which is only `640 crore.

Why do you think the reports reflected some of the exposures wrongly?

Reading of the exposures in these reports are wrong because they don’t come and ask us. They just speculate on the basis of the number of the charges that the registrar of the company has filed. These charges were filed five year ago. Two charges were filed when the exposure was one. Some of the analysts have realised and they have made corrections.

Where has the growth in the corporate book come from?

We have a very diversified book, so the growth come from all the sectors. In our industry classification, we have a section called others, which are all those industries where we were expecting less than 1% of our book. But the bulk of the growth has come from this sector which is 24.27%. There is a small growth in very large number of sectors. Though lending to NBFCs has reduced, our NBFC loan book is close to Rs 2,000 crore.

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