Bandhan Bank pegs ₹1,250 crore provisioning hit from credit loss framework shift

MUMBAI: A day after the Reserve Bank of India (RBI) directed banks to transition to the expected credit loss (ECL) framework for recognizing stressed loans, Bandhan Bank on Tuesday said it estimates a one-time provisioning impact of about ₹1,250 crore from the shift.

The central bank on Monday said lenders must adopt the ECL framework from 1 April 2027, while providing a glidepath to implement the framework in full by 31 March 2031.

“We assess a transition impact of roughly ₹1,250 crore of incremental provisions that will come through at the time of transition,” chief financial officer Rajiv Mantri said in the bank’s Q4 earnings call, adding that the annual impact would be ₹250-300 crore, depending on whether the bank amortizes it over four or five years.

The estimate is based on the balance sheet as of 31 December 2025, and the final impact could be similar or slightly lower when the transition takes place in April 2027, Mantri said.

Bandhan Bank reported a net profit of ₹534 crore for the March quarter (Q4FY26), up 68% year-on-year and 160% sequentially, driven largely by stronger non-interest income, which rose 10.2% year-on-year (YoY) and 11.6% quarter-on-quarter (QoQ) to ₹770 crore.

Net interest income (NII) rose 1.4% YoY and 4% QoQ to ₹2,796 crore. Net interest margin (NIM) stood at 6.2%, compared with 5.9% in the previous quarter and 6.7% a year earlier.

The sequential improvement in margins was driven by a lower cost of funds and reduced slippages, Mantri said, adding that NIMs are expected to improve further in FY27 and end the current financial year at least 20–30 basis points higher.

The improvement in funding costs was aided by the run-down of high-cost savings accounts and a shift towards granular retail deposits, which pulled savings account costs down to 3.9% from 5.5% a year ago, even as overall savings deposits declined 5.3%, Mantri said.

“Similarly, our term deposits are getting repriced. A chunk of them came through in Q4 for repricing, but we have some further repricing which is expected in Q1 and Q2 (FY27) as well,” he said.

Total deposits rose 10% YoY and 6% QoQ to ₹1.7 trillion as of March 2026. Low-cost current account and savings account (CASA) deposits accounted for 29% of total deposits, up 200 basis points year-on-year.

The bank has been reducing reliance on bulk deposits, which fell about 7% YoY, while retail deposits rose nearly 18% YoY, including 30% growth in retail term deposits, Mantri said. Current account deposits also grew 33%, further supporting the cost of funds.

Operating expenses, however, weighed on profitability, rising 12.8% YoY and 9.9% QoQ to ₹2,130 crore. Management attributed the increase to ₹60 crore spent on priority sector lending certificates, ₹61 crore of technology investments, and higher staff costs.

Advances rose 12.6% YoY and 6.2% on quarter to ₹1.5 trillion as of 31 March, with managing director and chief executive officer Partha Pratim Sengupta saying the focus remains on improving the share of secured loans and expanding distribution.

The bank expects loan and deposit growth in FY27 to broadly track industry trends. “Currently, deposits are growing around 10% and credit around 11–12%, so we will try to maintain the same industry pace,” Sengupta said.