Micro loan collections back at pre-Covid level; net NPAs may improve from 1.92 percent, says Bandhan Bank MD

Bandhan Bank MD & CEO Chandra Shekhar Ghosh

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26 Aug, 2025 12:21

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Private sector lender Bandhan Bank’s collection efficiency in the microfinance portfolio has reached its pre-pandemic level of 98 percent during the quarter ended June and is expected to remain stable as customers recover from COVID-19 induced stress, MD and CEO Chandra Shekhar Ghosh told Moneycontrol on July 26.

“If you look at our microfinance portfolio, collection efficiency is at its peak and back to pre-pandemic levels,” Ghosh said. Per Bandhan Bank’s April-June investor presentation, collection efficiency improved to 98 percent from 97 percent a quarter ago. Ghosh said that out of the total microfinance loans sourced by Bandhan Bank since June end last fiscal, 99 percent customers were paying on schedule, indicating a return to normalcy in business activities.

Other income hit

During the quarter ended June, Bandhan Bank’s other income was impacted in line with its peers, and totalled Rs 329.7 crore, well below the Rs 964.4 crore recorded a quarter ago and Rs 616.9 crore last fiscal. A major part of other income for Bandhan Bank is generated from processing of loans, with microfinance loans contributing the highest, Ghosh said. During the April-June quarter, other income was impacted due to seasonality and the Reserve Bank of India’s (RBI) new circular on micro loan rate harmonisation for lenders, he added.

“…We took time to upgrade our processes and systems for smooth disbursals…every bank has an impact (on other income) because of treasury loss too,” Ghosh said. “Other income will improve because during the festival season loan demand will be higher, and continue till March…,” he added.

NPA ratio

Bandhan Bank is also confident of maintaining its net non-performing asset (Net NPA) ratio at 1.92 percent during the current fiscal year or improving on the same. Gross NPAs, though, are subject to different terms and may come down if the lender opts for write-offs, and collections are better. “NPAs have stabilised and will not increase further…we would like to continue maintaining our net NPA levels at the present level of 1.92 percent till March, or even improve our position from here,” Ghosh said.

As at June end, Bandhan Bank’s GNPA ratio stood at 7.25 percent, higher than 6.46 percent as of March end, but lower in comparison with the 8.18 percent level a year ago. The net NPA ratio rose to 1.92 percent as on June 30 from 1.66 percent as on March 31.

Provisions

The bank made provisions to the tune of Rs 642.4 crore during the April-June quarter, lower than the Rs 1,460.9 crore provision a year ago. Overall, the provision coverage ratio (PCR) stood at 74.9 per cent as at June end. In view of the shrinking size of the lender’s restructured portfolio and robust asset quality outlook, the bank does not foresee a requirement to raise provisions significantly this fiscal, Ghosh said.