Back90% of eligible borrowers availed of 3-month moratorium, says Bank of Baroda CEO
In comparison, the percentage of borrowers opting for repayment deferment from private banks is quite lowSanjiv Chadha said that even in the case of existing standing instructions and installments already been debited from bank accounts, the bank gave borrowers the option to request for a refund
PremiumMumbai: After Reserve Bank of India (RBI) permitted banks to provide a three-month repayment moratorium, 90% of Bank of Baroda’s (BoB) eligible borrowers have opted for it, said Sanjiv Chadha, chief executive of the bank.
Chadha spoke at a webinar organised by Care Ratings on Monday.
“The RBI gave us the option of extending a moratorium to our clients and we decided to make it an opt-out event. This means everybody gets a moratorium unless someone specifically opts out of that. Ninety percent of our eligible clients have elected to use the moratorium," said Chadha.
In comparison, the percentage of borrowers opting for repayment deferment from private banks is quite low. For instance, Axis Bank said that as of 25 April, 10-12% of the customers opted for the moratorium. For Yes Bank, 15-25% of its borrowers, belonging to corporate, small businesses and retail segments, have opted for the moratorium.
Chadha said that even in the case of existing standing instructions and installments already been debited from bank accounts, the bank gave borrowers the option to request for a refund. “We recognise that liquidity is scarce and clients might want to preserve their liquidity cushion.," he said.
On stress in retail loans, Chadha said that some early signals of stress were there even before covid-19 came along. “There is no doubt that this portfolio is going to be vulnerable because the kind of instruments you have to craft a customised solution are not available for retail as they are for industrial borrowers, large corporates and MSMEs. Therefore, we are going to have challenges there," he said.
In terms of the covid-19 situation and return to normalcy, he said that based on anecdotal evidence the bank has in its conversations with clients, he expects that it is going to be at least six to nine months before normalcy returns.
“Now, what the normalcy means is something highly debatable. We believe that the biggest challenge that we face today is the uncertainty in terms of what is going to be the contours of the lockdown; how would demand resurrect; what would consumer behaviour likely to be; how would competition react," he said.
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