Month: July 2021

These 2 Stocks Can Rally Up To 36%, Buys Says This Brokerage

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TVS Motors: Buy For 36% upside from current levels

Current market price Rs 579.20
Target price Rs 780

Emkay Global estimates on select TVS Motors select parameters

2021-22 (estimated0 2022-23 (estimated)
EPS 20.4 27.4
P/E 27.6 20.5
Price to book 5.5 4.6

Emkay Global likes the stock of TVS Motors and has said, 2W volume is positive and premium motorcycles/scooters could outperform going ahead. According to the broking firm, the export outlook is also encouraging across most markets, owing to higher commodity prices and better forex availability to importers.

Why Emkay is betting on the stock of TVS Motors?

Why Emkay is betting on the stock of TVS Motors?

According to the broking firm, demand is improving in the domestic market with activities normalizing.

“Rural sales should improve as customer sentiments are positive due to a normal monsoon and healthy reservoir levels. Also, exports are healthy due to improving macros and stable exchange rates in key markets. Covid-19-affected markets such as Bangladesh and Nepal should see improvement from Aug’21. Monthly volumes should sustain at around 100,000 units and EBITDA margin should improve ahead on better scale, price increases and cost savings. Buy the stock with a price target of Rs 780,” the brokerage has said.

SBI Life Insurance

SBI Life Insurance

Broking firm, Prabhudas Lilladher has a buy rating on insurance major SBI Life Insurance. According to the brokerage, margins improve by 250 basis points, YoY & 80 basis points from FY21 to 21.2% and was higher than expectation of 20.6% on actual tax basis.

Current market price Rs 1,099
Target price Rs 1,250

Prabhudas Lilladher estimates on select SBI Life Insurance parameters

2021-22 2022-23
EPS 15.9 22.6
P/E 27.6 20.5
Price to enterprise value 2.7 2.3

Why Prabhudas Lilladher has a buy call on the stock of SBI Life?

Why Prabhudas Lilladher has a buy call on the stock of SBI Life?

According to Prabhudas Lilladher, COVID claims & reserving of Rs 4.4 billion (inclusive Rs 1.8 billion of Q4FY22) is near to industry trends with benefits reaped from mortality changes done in FY21.

“SBI Life Insurance has underperformed peers with valuations lowest in the sector and we believe gradual margin improvement, better cost metrics and growth prospects (strong distribution) will help catch up on valuations. Retain Buy with revised target price of Rs 1,250 (from Rs 1,150) based on 2.5x Sep-23 (rolled over from Mar-23),” the brokerage has said.

As far as the markets are concerned, says Dr. Joseph Thomas, Head Of Research, Emkay Wealth Management on the stock market. “The relatively more important factor to reckon with would be the Chinese ban on exports of certain commodities by Chinese firms including fertilizers may push up the cost of these products for the rest of the world, and may have consequences for trade and commerce in the near term.

Some of these factors may continue to dominate the discussions in the coming weeks too, as the markets reopen for business next week”

Disclaimer

Disclaimer

Investing in stocks poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage houses are not liable for any losses caused as a result of decisions based on the article. Investors should take care because the markets are near record highs.



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Tax Query: Setting off capital losses in delisted shares

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Kindly guide whether there is any method by which capital loss under Income Tax provisions can be set off against the shares which get delisted and are not traded, or have become unmarketable? Please also guide about the tax treatment on equity shares where capital reduction has been effected.

E Madhavan NairAs per the provisions of Section 71 of the Income-tax Act, 1961 (‘the Act’), losses under the head of capital gains can be set-off against income under the head of capital gains only. Further, as per the provisions of Section 70 of Act, Short-Term Capital Loss can be set-off against Long-Term or Short-Term Capital Gain. However, Long-Term Capital Loss can be set-off only against Long-Term Capital Gains. Holding period of capital asset determines the nature of Capital Assets viz. a Long-Term Capital Asset or a Short-Term Capital Asset. As per the provisions of the Act, assets in the nature of unlisted equity share would qualify as Long-Term Capital Asset, if at the time of selling, the same has been held for a period of 24 months or more. Otherwise, the same would qualify as Short-Term Capital Asset. In order to answer the query, additional facts and clarity would be required. However, in the instant case, if the subject Capital Loss is Short-Term in nature (to be ascertained based on the period of holding and nature of the asset), such loss can be set off against Short-Term / Long- Term Capital Gain arising from any other capital asset. However, if such loss is Long-Term in nature, the same can be set off against Long-Term Capital Gain arising from any other capital asset. In case of a Capital Reduction, if the shareholders receive any payout the tax treatment as per the provisions of the Act would be twofold as mentioned below:

Taxability as Dividend: As per the provisions of section 2(22)(d), distribution by company on capital reduction (to the extent attributable to its accumulated profits), shall be considered as deemed dividend. It is also important to note that as per the amendments made by Finance Act 2020, companies are no longer required to pay dividend distribution tax. Dividend income is taxable in the hands of the shareholder at applicable slab rates. The payor company would be required to deduct Taxes at Source (TDS) on such dividend under section 194 of the Act at 10 per cent, for dividends paid in cash. For dividends paid via any mode other than cash, TDS shall be required, if aggregate payment exceeds ₹5,000. Taxability as Capital Gain / Loss: Taxation for distribution of profits (over and above accumulated profits) has been a matter of debate. There are judicial precedents which suggest that such distributions shall be regarded as transfer and would result in Capital Gain / Loss in the hands of the shareholder.

The writer is a practising chartered accountant

Send your queries to taxtalk@thehindu.co.in

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Simply Put: New tax regime

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A phone call between two friends leads to a conversation on the new tax regime that one can choose while filing income tax returns starting from assessment year 21-22.

Akhila: Hi. How are you placed this weekend?

Karthik: Planning to do some online reading on income tax return filing.

Akhila: Good. Do you know that you can choose to go with either the old or the new tax regime?

Karthik: Yeah. When I glanced at the ITR form, I found a question saying ‘are you opting for new tax regime u/s 115BAC?’ Do you have any idea on what to opt for?

Akhila: If you choose to continue with the existing tax regime, your income – after the benefit of deductions and exemptions – will be taxed at the applicable existing tax rate. While under the new tax regime, your income will be taxed at lower tax rates but without the benefit of most deductions and exemptions.

Karthik: Lower tax rates! Tell me how much lower compared to the old tax regime?

Akhila: Under the old regime, there were only four income slabs. But under the new regime, there are seven. Earlier, income between ₹5 lakh and ₹10 lakh attracted 20 per cent tax. Under the new tax regime, income slabs of ₹5 lakh to ₹7.5 lakh and more than ₹7.5 lakh to ₹10 lakh attract 10 per cent and 15 per cent tax respectively.

Similarly, earlier, income of more than ten lakh was taxed at 30 per cent. You can choose the new tax regime under which an income of ₹10 lakh to ₹12.5 lakh is taxed at 20 per cent, ₹12.5 lakh to ₹15 lakh at 25 per cent and only above ₹15 lakh at 30 per cent.

Karthik: I think I will go for the new tax regime.

Akhila: Don’t get too excited. You have to do some number crunching to decide what suits you best.

Karthik: Ok, tell me what benefits will I forego if I go for the new tax regime?

Akhila: A lot. The popular Section 80C deductions such as investments in provident fund, national pension scheme, expenses towards life insurance premium and home loan principal repayment; section 80D deductions for medical insurance premium; Section 24 deduction for interest paid on housing loan; and exemption of House Rent Allowance or HRA are some of them. Standard deduction and professional tax deduction available for salaried employees along with tax benefits on leave travel allowance (LTA) are others.

Karthik: Whoa!

Akhila: What is more beneficial – old or new tax regime – depends on a case-to-case basis. So, do your homework.

Karthik: I think I have a bigger task this year. Thanks.

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Why IPOs don’t make you rich

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With recent Initial Public Offers (IPOs) delivering blockbuster returns, are you beating yourself up for not applying? On the face of it, the absolute return of 80 per cent on the Zomato stock or 109 per cent on the Tatva Chintan Pharma stock within a few days of the IPO may appear a huge missed opportunity.

But if you’ve been regretting this, you can rest easy. Retail investors in India have a rather low probability of bagging allotments in fancied IPOs. The more heavily subscribed an IPO, the less your chances of winning the allotment lottery. More important, winning the allotment lottery doesn’t mean much. Retail investors who do get IPO allotments usually get such low quantities of shares that it hardly makes a difference to their wealth – even if prices were to double on listing.

Allotment lottery

To know why, you need to know SEBI’s rules on the allotment process for retail investors in IPOs. Book-built IPOs in India are required by regulations to reserve quotas for QIBs (qualified institutional buyers), Non-Institutional Investors (NIIs) and retail investors. Individual investors placing bids of upto ₹2 lakh are treated as retail and those with bids above ₹2 lakh are classified as NIIs.

Investors who bid in IPOs are required to put in applications for at least one lot of shares. Allotments too are made based on the minimum lot size, which varies across issuers. In the Zomato IPO, one lot was 195 shares, in Tatva Chintan Pharma it was 13 shares and in GR Infraprojects it was 17 shares.

Until 2012, the rules required companies to allot shares to all bidders in a book-built IPO on a proportionate basis. But in 2012, to democratise allotment for retail investors, SEBI decreed that all retail bidders should be allotted at least one lot, irrespective of their application size.

When IPOs are under-subscribed or feature a small retail over-subscription, issuers are able to allot one lot to all retail bidders. But in heavily over-subscribed IPOs, issuers find that there are not enough shares to allot even one lot to all retail applicants. In such cases, they choose retail investors who will get one lot through a lottery system. When an IPO is highly fancied, retail investors need to win this draw of lots to bag any allotment. Even if they get chosen, they can hope to receive only one lot of shares, irrespective of their application size.

Modest gains

How this works is better understood by taking live examples of the recent IPOs. The Zomato IPO for instance, had reserved 12.27 crore shares for retail investors but received 27 lakh valid retail applications for 83.04 crore shares. This made it impossible for it to allot one lot to all retail investors and allotments were decided based on a lottery.

The basis of allotment document shows that retail bidders were allotted shares in the ratio of 116:469 for smaller application sizes and 23:93 for larger ones. That is, in the lottery only one in every four retail bidders got allotment. In line with the rule, all these winning bidders, whether they bid for just one lot (195 shares) or the maximum of 13 lots (2535 shares) received identical allotments of 195 shares.

In effect, whether you put in an application for ₹14,820 (195*₹76) or ₹1.92 lakh (2535*₹76), you received Zomato shares worth just ₹14,820 (if you were lucky). Therefore, the maximum gain that any retail investor could have pocketed on the Zomato IPO till date is ₹11,310. While this may seem like a nice round sum to make in a weeks’ time, it will not make a significant difference to one’s net worth.

The retail allotment pattern in Tatva Chintan Pharma, an even more heavily over-subscribed IPO (retail bids for 35 times) drives home the point more forcefully. Given that the retail quota here saw a mad scramble, only 4 in every 100 retail bidders were allotted shares (allotment ratios were at 16:365 and 5:114). Irrespective of whether a retail investor put in an application for ₹14,079 (one lot) or ₹1.97 lakh (14 lots), he bagged just 13 shares. Despite the stock more than doubling post listing, at the current price of ₹2270, the maximum gain that any retail investor could have made is ₹15,431.

The NII gambit

If ‘democratic’ allotments in the retail quotas of IPOs prevents you from making big gains, can you beat the system by bidding more than ₹2 lakh in the NII category? This does improve your chances of allotment, but does not guarantee a meaningful number of shares.

Given that NII portions of fancied IPOs also get heavily over-subscribed, investors who put in lower application sizes within NIIs again have to rely on a draw of lots. To bag assured NII allotment, your application size has to be really large.

For instance, to bag assured allotment in the Zomato IPO, the minimum NII bid you had to place was for 7990 shares or ₹6.07 lakh. But even these NIIs received allotment of just 233 shares. To get a meaningful allotment of Zomato shares worth ₹1 lakh, you needed to put in an application of over ₹40 lakh!

This IPO math in fact drives home an important lesson on wealth creation from equities. To make meaningful money, you don’t just need your stock to deliver blockbuster returns, you also need to own a meaningful position in it, in your portfolio. This is indeed why many seasoned investors prefer to skip the IPO allotment scramble and accumulate IPO companies, if they prove good businesses, well after listing.

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Bandhan Bank Q1 net falls 32% on higher provisioning

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In Q4FY21, gross slippages were around Rs 3500 crore.

Private sector lender Bandhan Bank on Friday reported a 32.14% year-on-year (y-o-y) fall in net profit to Rs 373.08 crore in the first quarter of the current fiscal year on the back of additional provisions on non-performing assets (NPAs) and accelerated provisions on standard assets for potential impact of Covid-19.

During the first quarter of FY22, the lender made additional provisions on NPA amounting to Rs 750.83 crore for potential impact of Covid 19 on certain loan portfolios, while holding accelerated provisions of Rs 322.66 crore on standard assets as on June 30.   The Kolkata-based bank had posted a Rs 549.82-crore net profit in the first quarter of 2020-21, while in the fourth quarter of 2020-21 the net profit was Rs 103.03 crore.

The total provision and contingencies during the quarter under review rose 61.93% YoY to Rs 1374 crore from Rs 849.06 crore in the same quarter previous fiscal year. Gross NPAs as a percentage of total loans increased 137 basis points quarter on quarter to 8.18% from 6.81% during the fourth quarter of the last fiscal. In Q1FY22, net NPA ratio, however, fell 22 basis points QoQ to 3.29% from 3.51% in Q4FY21.

Commenting on the performance, Chandra Shekhar Ghosh, MD and CEO of Bandhan Bank, said, “In spite of challenging environment due to Covid second wave, we have delivered the best-ever quarter in terms of operational performances. Collections continue to improve with Covid restrictions getting relaxed.”

During Q1FY22, the bank’s loan portfolio grew 8.1% YoY, while its EEB (erstwhile micro-banking segment) portfolio grew 12% YoY. Total collection efficiency for the EEB portfolio during the June quarter stood at 98%. Net interest income (NII) for the quarter grew 16.70% YoY to Rs 2,114.08 crore, against Rs 1,811.53 crore in the corresponding quarter of the previous year. Net interest margin (NIM) stood at 8.5%, up 35 bps from 8.15% for Q1FY21.

Ghosh said during Q1FY22, around Rs 4,661 crore of loans were restructured, while gross slippages stood at Rs 1,661 crore.

In Q4FY21, gross slippages were around Rs 3500 crore.

“EEB is 60% of our business and that is unsecured. And, situation was such that with Covid in the last quarter doorstep collections were not possible in many parts. So, slippages have been higher in this business,” said Sunil Samdani, CFO, Bandhan Bank. In terms of overall collection efficiency, the bank said July was better than June.

“Our growth situation is intact,” Ghosh said, adding the bank was focussing on transformation and diversification of its balance sheet for greater secure-unsecure loans balance.

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Reliance Home Finance Q1 net loss widens to ₹287.50 crore

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Reliance Home Finance net loss widened to ₹287.53 crore for the quarter ended June 30, 2021 as compared to a net loss of ₹161.34 crore in the corresponding period last fiscal.

The company’s total revenue from operations fell by 46.9 per cent to ₹129.5 crore in the first quarter of the fiscal from ₹243.84 crore a year ago.

Impairment on financial instruments also rose to ₹233.86 crore in the first quarter of the fiscal as against ₹160.79 crore a year ago.

The company’s lenders had approved Authum Investment and Infrastructure Limited (Authum) as the final bidder on June 19, 2021 as part of its resolution process.

“The company has shared the final resolution plan along with the distribution mechanism with the debenture trustees to call for the debenture holder’s meeting and seek approval on the resolution plan along with the distribution mechanism,” Reliance Home Finance said in its results.

According to the auditor’s note, the company has defaulted in payment of borrowings obligations amounting to ₹8,217.47 crore as on June 30, 2021 and the asset cover has also fallen below 100 per cent of outstanding debentures amounting to ₹5,967 crore.

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Stretch dates for better rates

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Falling interest rates on bank FDs have been pinching investors for quite some time now. Investors with some appetite for risk flocked towards small finance banks in search of better rates. The ones comfortable with higher risk choose deposits offered by NBFCs and other corporates. For those looking for better rates, there is another way out – special deposits.

Some banks offer a tad higher interest rate on FDs of certain special tenures. For instance, Equitas Small Finance Bank offers an FD for 888 days (a bit over 2 years and five months). The interest rate on this deposit is 6.5 per cent per annum. It offers 6.35 per cent per annum both on its deposits of greater than 2 years to 887 days and on deposits of 889 days and above. Since seniors get a flat 0.5 per cent additional rate on all deposits of Equitas SFB, they can benefit more from this special tenure FD.

DCB Bank offers a special rate for deposits with a tenure of 700 days (23 months). This deposit can fetch you 6.4 per cent per annum. Compared to this, the bank’s other deposits with tenures of 15 months and beyond, up to less than 3 years (except 700 days) offer only 6 per cent per annum. Seniors get 50 basis points (bps) higher interest across all tenures. Note that, you must deposit a minimum of ₹10,000, across deposits of all tenures.

Similarly, Axis bank offers a rate of 5.15 per cent for FDs with tenure of 1 year and 5 days to 1 year and 10 days. On all other deposits with tenure greater than 1 year (up to 1.5 years) the rate of interest is 5.1 per cent.

Just a day longer

A few other banks have higher rates for select range of tenures. In these cases, by expanding your investment tenure by just a day, you can avail higher interest rates on your bank FDs.

For instance, AU Small Finance Bank offers 6.1 per cent per annum on FDs with tenure ranging from 12 months and 1 day to 15 months. This is higher than the 5 per cent on deposits of up to 1 year and the 6 per cent offered on tenures beyond 15 months and up to 2 years.

If you have a slightly longer horizon, you can consider the bank’s FD for 2 years and 1 day which can fetch you 25 basis points higher interest rate per annum than a 2-year deposit.

Even with HDFC bank, by stretching the deposit tenure for a day beyond two years, you can earn 25 basis points higher rate, that is 5.15 per cent per annum.

ICICI Bank offers 4.9 per cent on deposits with a tenure of up to 1.5 years, beyond which the rates are 10 basis points higher i.e. 5 per cent per annum for tenures of up to 2 years. A deposit for even a day longer than 2 years can fetch you 5.15 per cent per annum.

Word of caution

However, do keep a check on the bank’s financials and do not base your investment decision solely on the rate of return offered. For instance, while DCB Bank offers higher rates, in the recent March quarter it reported a spike in its GNPA (gross non-performing assets) to 4.09 per cent from 2.46 per cent a year ago. This is expected to deteriorate further in the coming quarters with the second wave of the pandemic hampering collections. While the bank is adequately capitalised (CRAR of 19.67 per cent), its provisions cover just about 62 per cent of the bad loans as of March 2021.

Also, since the interest rates are bottoming out it would be wise to limit the tenure of your deposits to a maximum of two to three years today. Then, you will be well placed to benefit from higher returns on your FDs when rates go up. Also, be mindful of any restrictions on pre-mature withdrawals on such special FDs.

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Demystifying restore benefit in health insurance

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Since the outbreak of Corona virus many people have filed health insurance claims, resulting in partial or complete exhaustion of their sum insured (SI) or health cover amount. While the claim would have reduced the policyholders’ SI, most health policies in the market come with a built-in back-up option. In other words, insurers fully reinstate the original SI once it is exhausted. This means after the entire cover amount is used up in a policy year, there will still be a cover available to the extent of the SI.

The reinstatement of SI feature is also known as restore, recharge, refill or reload feature across insurers and is available in case of hospitalisation. But there are minor drawbacks to this feature. Here is all what a policyholder should know about this benefit.

How does it work

Almost all health insurers offer to refill your original health cover amount post a claim but the process varies across insurers.

A restoration of SI in your health policy can happen in two ways. One, an insurer refills the used-up portion of SI only after complete exhaustion of the policy amount. Say suppose, your health cover is ₹10 lakh and during the policy period you utilise the entire amount. Then, the refill feature come into play and reinstates your cover up to ₹10 lakh, which was your original SI. But if you claim only ₹5 lakh in this scenario, your SI stands at ₹5 lakh only. For instance, policies including Manipal Cigna’s Pro Health Insurance plan, Activ Health from Aditya Birla Health insurance, ICICI Lombard’s Complete Health insurance and Star Health’s Star comprehensive plan offer this benefit.

Two, there are some policies in the market which offer to reinstate the cover even if there is partial utilisation only. That is, if you claim ₹5 lakh out of ₹10 lakh (SI), then the SI is reinstated up to ₹5 lakh and your total health cover is ₹10 lakh post the claim. Policies that offer this feature include Max Bupa’s Go Active, HDFC Ergo’s Optima Secure plan, Arogya Supreme plan from SBI General and Lifeline plan from Royal Sundaram General Insurance.

Take note

While with the restoration feature, you and your family will never run out of health coverage during any policy year, policyholders should be aware of three key points.

One, typically, the restore benefit is available only once during a policy year where 100 per cent up to base SI is reinstated after complete or partial exhaustion of base SI. If there are multiple claims during the policy year, then the restore benefit may not help. However, there are a few policies in the market that offer unlimited restoration benefit during the policy period if you exhaust your health cover completely or partially. Care Plus plan from Care Health Insurance, Max Bupa’s ReAssure plan and Manipal Cigna’s Pro Health Insurance plan are a few examples.

Second and one of the most important points to remember is that, an insurer reinstates the SI and the same will be available only for subsequent claims. That is, if you make a claim for ₹5 lakh for heart-related ailments (SI is ₹10 lakh), the insurer will restore ₹5 lakh that you have claimed but it can be utilised only on your next claim and not for your current claim. So, even if you exhaust ₹10 lakh and the total claim amount works to ₹12 lakh, the balance ₹2 lakh has to come from your pocket. This is because the ‘restored’ SI will be available from next claim onwards.

Also, most policies do not offer the ‘reinstated’ SI for the same illness for which you had made the claim in a policy year. Say, you have claimed for one specific heart-related illness, then the ‘restored’ or ‘reinstated’ SI may not be used for the same ailment by the policyholder. However, there are a few policies in the market such as ReAssure (Max Bupa) and Care Plus (Care Health Insurance) that do cover for the same illness subsequently.

And lastly, the restored or reinstated SI if unutilised during the policy year, expires. That is, it cannot be carried forward for next year. It will also not be considered for no claim bonus (a reward that policyholders receive from the insurer for staying healthy and not making any claim on the policy in a year) calculation.

In case you have an older health policy which doesn’t have a restore or refill feature, then you can consider migrating, though ‘restore’ benefit shouldn’t be your only criteria for policy selection. If the policyholder feels he/she is missing out on the new features such as restoration, then one can consider migrating or porting to a new policy. Indraneel Chatterjee, Co-Founder, RenewBuy says “The decision for migrating or porting should be based on three key factor – premium comparison, room-rent capping and co-payment clause. Only if these factors are favourable, one can check other features such as restore or refill”.

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IDFC First Bank reports net loss of ₹630 crore in Q1 on higher provisions

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Private sector lender IDFC First Bank reported a standalone net loss of ₹630.04 crore in the first quarter of the fiscal year due to a sharp rise in provisions.

The bank had reported a standalone net profit of ₹93.54 crore in the quarter ended June 30, 2020.

Total income grew by 11.4 per cent to ₹4,938.05 crore in the first quarter of the fiscal from ₹4,434.12 crore a year ago.

The bank’s net interest income grew by a robust 25 per cent to ₹2,185 crore in the quarter ended June 30, 2021 as against ₹1,744 crore a year ago.

Net interest margin was 5.51 per cent as on June 30, 2021 versus 4.86 per cent a year ago and 5.09 per cent in the fourth quarter of 2020-21. In a statement on Saturday, the bank said this was because the cost of funds further reduced.

Other income surged by 75.1 per cent to ₹848.76 crore from ₹484.85 crore a year ago.

Additional Covid-19 provisions

Provisions shot up by 145.9 per cent to ₹1,878.61 crore in the first quarter of the fiscal as against ₹764.08 crore in the corresponding period a year ago.

“The bank has created additional Covid-19 provisions of ₹350 crore during the quarter taking the total Covid-19 provision pool to ₹725 crore. The bank believes that the full estimated impact of second wave of Covid is now provided for in the books of the bank,” it said.

Noting that there was no moratorium provided to customers during the second wave of the pandemic, it said that there was ageing provisions that were required to be taken as per its conservative provisioning norms.

“The bank believes that these provisions may not reflect actual economic loss but represent a delay in timing of repayments,” it further said.

Based on the recent portfolio quality indicators (latest cheque bounce trends, collection efficiency, vintage analysis), the bank said it expects the provisions to taper off for the rest of the year if there is no third wave of the pandemic.

“Regarding the loss during the quarter, we have made prudent provisions for Covid second wave, and expect provisions to reduce for the rest of the three quarters in the fiscal. We guide for achieving pre – Covid level gross and net NPA, with targeted credit loss of only two per cent on our retail book by the fourth quarter of 2021-22 and onwards, assuming no further lockdowns,” said V Vaidyanathan, Managing Director and CEO, IDFC First Bank.

The bank’s asset quality deteriorated. Gross non performing assets shot up to ₹4,667.12 crore or 4.61 per cent of gross advances as on June 30, 2021 from 4.15 per cent as on March 31, 2021 and 1.99 per cent a year ago.

Net NPAs also rose to 2.32 per cent of net advances from 0.51 per cent as on June 30, 2020.

Standard restructured outstanding portfolio (under the Covid-19 relief package provided by the RBI) in retail loans was 1.81 per cent of the overall retail loan book as of June 30, 2021. Restructuring for the overall portfolio stood at 2.01 per cent of the total funded assets.

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