Union Bank home loans at lowest ever 6.4% rate, BFSI News, ET BFSI

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Union Bank of India on Tuesday announced a reduction in its home loan interest rates, which will now start from 6.4% – the lowest rate in the industry. The reduced rate will be effective from October 27. The new rates will apply to customers applying for fresh loans or those who wish to transfer their existing loans including balance transfers. This is the lowest home loan rate offered by a mainstream bank ever.

“We are offering 6.4% for the best category of customers with credit scores of over 800. The low-cost deposits are providing us a cushion enabling us to cut rates even further,” said Rajkiran Rai, MD & CEO, Union Bank of India. He added that the bank was working with thin margins as defaults among top-rated customers is unlikely and also the RBI assigns a lower risk-weightage to home loans, which enables banks to lend more with less capital.

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Axis Bank’s Q2 standalone net up 86%

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Private sector lender Axis Bank reported an all time high quarterly net profit of ₹3,133.32 crore in the second quarter of the fiscal as provisions declined.

This was 86.21 per cent higher than ₹1,682.67 crore in the second quarter of last fiscal.

For the quarter-ended September 30, 2021, the bank’s net interest income grew eight per cent year-on-year to ₹7,900 crore from ₹7,326 crore in the same period last fiscal.

Net interest margin stood at 3.39 per cent compared to 3.58 per cent a year ago.

In a media call on Tuesday, the bank said it expects NIM to improve as growth improves and the bank deploys liabilities more effectively.

Other income grew by 6.4 per cent in the July to September 2021 quarter to ₹3,798.38 crore from ₹3,569.35 crore in the same period last fiscal. Fee income grew 17 per cent year-on-year to ₹3,231 crore in the quarter under review.

Provisions fell by 60 per cent to ₹1,735.09 crore in the second quarter of the fiscal from ₹4,342.82 crore a year ago.

“The bank has not utilised Covid provisions during the quarter. The bank holds cumulative provisions (standard + additional other than NPA) of ₹12,951 crore at the end of the second quarter of 2021-22,” Axis Bank said in a statement on Tuesday.

Gross NPA falls

As on September 30, 2021, the bank’s reported gross NPA stood at ₹24,148,61 crore or 3.53 per cent of gross advances. This was at 3.85 per cent as on June 30, 2021 and 4.18 per cent as on September 30, 2021.

Net NPAs, however, increased to ₹7,199,97 crore or 1.08 per cent at the end of the second quarter from 0.98 per cent a year ago. However, on a sequential basis, it fell from 1.2 per cent as on June 30, 2021.

“On the business front, we are seeing solid progress. We continue our focus on SMEs and mid-corporate segments, and on the retail side we see better disbursements and growth driven by secured products,” said Amitabh Chaudhry, Managing Director and CEO, Axis Bank, adding that consumer and business confidence is likely to trend up in the second half of the fiscal.

The bank’s deposits grew 18 per cent year-on-year to ₹7,36,286 crore while advances grew 10 per cent year-on-year to ₹6,21,719 crore as on September 30, 2021.

Axis Bank said its restructuring amounted to 0.64 per cent of customer assets and was amongst the lowest in the larger peer banks.

It implemented resolution plans in 8,162 accounts with an exposure of ₹2,124.2 crore under the RBI’s Resolution Framework 1.0. Of this, ₹45.77 crore slipped into NPA during the first half of the year and ₹26.51 crore was written off.

Under the Resolution Framework 2.0, the bank has an exposure of ₹2,518.56 crore to accounts where resolution plans have been implemented. This has led to an increase in provisions by ₹680.89 crore.

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Reserve Bank of India – Press Releases

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The Reserve Bank of India (RBI) has, by an order dated October 26, 2021 imposed a monetary penalty of ₹90.00 lakh (Rupees ninety lakh only) on Vasai Vikas Sahakari Bank Ltd., Vasai, Maharashtra (the bank) for non-compliance with the directions issued by RBI on “Management of Advances – UCBs”, “Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs”, with the specific directions issued to the bank vide RBI’s letter dated November 22, 2018 and with the provisions of section 31 read with section 56 of the Banking Regulation Act, 1949 (the Act). This penalty has been imposed in exercise of powers vested in RBI conferred under section 47 A (1) (c) read with sections 46 (4) (i) and 56 of the Act, taking into account failure of the bank to adhere to the aforesaid directions issued by RBI and provisions of section 31 read with section 56 of the Banking Regulation Act, 1949.

This action is based on deficiency in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

Background

The statutory inspection of the bank conducted by RBI with reference to the bank’s financial position as on March 31, 2019, the Inspection Report pertaining thereto and examination of all related correspondence revealed, inter alia, that the bank had not complied with the RBI directions on ensuring end use of funds in borrowal accounts and classification of loans/ advances as non-performing assets, specific direction of RBI for ensuring that the bank’s balance sheet and profit & loss account are signed by at least three of it’s directors in accordance with section 29 read with section 56 of the Act (despite having noted to ensure such compliance) and the provisions of section 31 read with section 56 of the Act. In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed for contravention of the RBI directions and the provisions of the Act.

After considering the bank’s replies to the notice and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions and provisions of the Act was substantiated and warranted imposition of monetary penalty, to the extent of non-compliance with such directions and provisions of the Act.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/1100

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Central Bank of India reports 55% y-o-y rise in second quarter net profit

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Central Bank of India (CBoI) reported a 55 per cent year-on-year (yoy) rise in its second quarter net profit at ₹250 crore against ₹161 crore in the year ago period, buoyed by lower loan loss provisions, write-back in provisions for standard assets, among others.

The public sector bank’s net interest income (difference between interest earned and interest expended) was up about 6 per cent y-o-y to ₹2,495 crore (₹2,354 crore in the year ago period).

Total non-interest income, comprising fee-based income, treasury income and other receipts edged up 1.55 per cent y-o-y to ₹720 crore (₹709 crore).

Loan loss provisions declined 56 per cent y-o-y to ₹311 crore (₹707 crore). The bank received a write-back of ₹394 crore from provisions it made towards standard assets (against ₹33 crore provision it had made under this head). Income tax provision was also lower at ₹103 crore (₹193 crore).

Slippages

Fresh slippages were higher at ₹2,104 crore (₹1,281 crore in the first quarter). Reduction in non-performing assets (NPAs), including via upgradation, recovery (including sale to asset reconstruction company), regular write-off, stood at ₹2,781 crore (₹2,790 crore).

Gross NPAs improved to 15.52 per cent of gross advances as on September-end 2021 against 15.92 per cent as on June-end 2021. Net NPAs also improved to 4.51 per cent of net advances as against 5.09 per cent.

The bank seems to be closer to being brought out of the Reserve Bank of India’s prompt corrective action (PCA) framework as it is no longer in breach of any of the four risk thresholds (capital, asset quality, profitability and leverage), going by the numbers in the analyst presentation.

Total advances declined about 1 per cent y-o-y to ₹1,75,594 crore. The lender said it had done a technical write-off (two) of advances of ₹4,810 crore during quarter-ended March 2021. If this was not done, then figure of advances as on September-end 2021 would have been ₹1,80,404 crore, with y-o-y growth of 1.75 per cent.

Total deposits increased by 4 per cent y-o-y to ₹3,36,500 crore. The share of low-cost CASA deposits increased to 49.79 per cent of total deposits from 47.72 per cent in the year ago period.

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1 PSB Stock To Buy For 2 Quarters As Suggested By HDFC Securities

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1. Indian Bank:

The buy has been given on this PSU Bank for a target price of Rs. 214 i.e. an upside of 14 percent from the current levels.

HDFC Securities’ take on Indian Bank:

There has been instilled confidence after the successful transaction of Air India that government will progress well on its divestment agenda. Also, for the PSBs that are considered to be weak IDBI Bank as well as Bank of Maharashtra there is seen cleaning of books and transfer of bad assets to the NARC as visible in the Q2 results.

The move augurs well for the PSBs which until some time faced huge NPA crisis. “Both of these developments augur well for the prospects of PSU banking stocks as they provide higher margin of safety in terms of valuation in an otherwise over-heated market”, said the brokerage report.

“We have been observing a sharp re-rating in the PSU banking space lately. Nifty PSU Bank Index has been making higher highs since last four weeks and is up by 12.8% during that time. Privatization theme is keeping them in the lime light and now the hope of earnings as wellas asset quality recovery would further sustain the rally. Some of the good quality names within the PSBs with loan book or CASA ratio as good as some top tier private banks, are available at almost half the book value of FY23E; as against about 2x to 3x Price-to-Book Value for private players”, added the report.

Re-rating prospects to increase with acquisition by big corporates

Re-rating prospects to increase with acquisition by big corporates

Lending quality has been worked on and there is no crisis amid the covid crisis. So, there are expectations that the valuation gap between private and public lenders will reduce faster. “We believe that the PSU banks might see goodaddition to the book value per share in the next year mainly on account relatively lower credit costs and recoveries. We further believecquisition of some PSU Banks by the any prestigious corporates/Institutions – local or foreign – at a good valuation may further re-rate the sector.

 ICRA expects credit growth for banks

ICRA expects credit growth for banks

Amid increased vaccination pace and pick up in recovery there is expected pick up in credit offtake too. ICRA expects credit growth of 7.3-8.3% for banks

for FY22 compared to 5.5% for FY21. It believes that with the improved capital and profitability position of public banks, which accounts for a 62% share in bank loans, and abundant liquidity in the banking system, supply of credit does not appear to be a constraint.

 Rationale for a buy

Rationale for a buy

1. Better managed PSB

2. low valuations

3. Required limited support from the centre in raising funds.

4. Not a single rupee loss in the last decade despite the credit blow that hit the overall banking industry.

5. Good dividend track record

Disclaimer:

Disclaimer:

The stock mentioned herein is taken from the report of HDFC Securities and investors need not construe the details given here as a suggestion to buy rather they should do their own study and analysis.

GoodReturns.in



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Reserve Bank of India – Press Releases

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The Result of the auction of State Development Loans for 13 State Governments held on October 26, 2021.

Table
(Amount in ₹ crore)
  ANDHRA PRADESH 2037 ANDHRA PRADESH 2036 ASSAM 2026 ASSAM 2031
Notified Amount 500 500 500 500
Tenure 16 15 5 10
Competitive Bids Received        
(i) No. 86 95 22 48
(ii) Amount 2669 2686 1685 1655
Cut-off Yield (%) 7.02 7.02 6.09 6.99
Competitive Bids Accepted        
(i) No. 1 1 4 18
(ii) Amount 453.718 450 494.999 459.999
Partial Allotment Percentage of Competitive Bids        
(i) Percentage 90.7436 90 64.9997 27.5859
(ii) No. (1 bid) (1 bid) (2 bids) (5 bids)
Non-Competitive Bids Received        
(i) No. 7 7 2 8
(ii) Amount 46.282 65.574 5.001 40.001
Non-Competitive Price (₹) 100 100 100.04 100.11
Non-Competitive Bids Accepted        
(i) No. 7 7 2 8
(ii) Amount 46.282 50 5.001 40.001
Partial Allotment Percentage of Non-Competitive Bids        
(i) Percentage 76.2497
(ii) No. (7 bids)
Weighted Average Yield (%) 7.02 7.02 6.0799 6.9745
Total Allotment Amount 500 500 500 500

  BIHAR 2030 CHHATTISGARH 2028 GUJARAT 2031 HARYANA 2028
Notified Amount 2000 1000 1500 1500
Tenure 9 7 10 7
Competitive Bids Received        
(i) No. 74 56 153 84
(ii) Amount 6243 4420 10395 6790
Cut-off Yield (%) 6.95 6.62 6.93 6.63
Competitive Bids Accepted        
(i) No. 35 16 17 26
(ii) Amount 1907.999 974.995 1350 1465.971
Partial Allotment Percentage of Competitive Bids        
(i) Percentage 19.2103 83.1766 80.2721 55.7215
(ii) No. (5 bids) (4 bids) (8 bids) (5 bids)
Non-Competitive Bids Received        
(i) No. 7 4 15 4
(ii) Amount 92.001 25.005 187.675 34.029
Non-Competitive Price (₹) 100.24 100.05 100.05 100.07
Non-Competitive Bids Accepted        
(i) No. 7 4 15 4
(ii) Amount 92.001 25.005 150 34.029
Partial Allotment Percentage of Non-Competitive Bids        
(i) Percentage 79.9254
(ii) No. (15 bids)
Weighted Average Yield (%) 6.9141 6.6104 6.923 6.6176
Total Allotment Amount 2000 1000 1500 1500

  MADHYA PRADESH 2031 MAHARASHTRA 2033 PUDUCHERRY* 2027 RAJASTHAN 2031
Notified Amount 2000 2500 125 1000
Tenure Re-issue of 6.85% Madhya Pradesh SDL 2031 Issued on September 15, 2021 Re-issue of 6.91% Maharashtra SDL 2033 Issued on September 15, 2021 6 10
Competitive Bids Received        
(i) No. 125 214 12 115
(ii) Amount 6100 6262.25 850 6392
Cut-off Yield (%) 6.9803 7.0292 6.96
Competitive Bids Accepted        
(i) No. 51 104 17
(ii) Amount 1882.988 2276.832 900
Partial Allotment Percentage of Competitive Bids        
(i) Percentage 59.9975 67.1469 51.9084
(ii) No. (10 bids) (5 bids) (8 bids)
Non-Competitive Bids Received        
(i) No. 6 10 3 12
(ii) Amount 117.012 223.168 1.156 155.087
Non-Competitive Price (₹) 99.18 99.22 100.07
Non-Competitive Bids Accepted        
(i) No. 6 10 12
(ii) Amount 117.012 223.168 100
Partial Allotment Percentage of Non-Competitive Bids        
(i) Percentage 64.4799
(ii) No. (12 bids)
Weighted Average Yield (%) 6.9647 7.0065 6.9503
Total Allotment Amount 2000 2500 0 1000

  RAJASTHAN 2027 TAMILNADU 2051 UTTAR PRADESH 2031 WEST BENGAL 2041
Notified Amount 1000 1000 2500 2500
Tenure 6 Re-issue of 6.96% Tamil Nadu SDL 2051 Issued on May 19, 2021 10 20
Competitive Bids Received        
(i) No. 74 47 149 107
(ii) Amount 5640 4195 9480 11925
Cut-off Yield (%) 6.34 7.0977 6.99 7.08
Competitive Bids Accepted        
(i) No. 13 1 55 5
(ii) Amount 967.31 970.744 2250 2377.041
Partial Allotment Percentage of Competitive Bids        
(i) Percentage 13.322 97.0744 51.8216 91.6975
(ii) No. (3 bids) (1 bid) (22 bids) (4 bids)
Non-Competitive Bids Received        
(i) No. 6 4 15 6
(ii) Amount 32.69 29.256 300.453 122.959
Non-Competitive Price (₹) 100.1 98.3 100.08 100
Non-Competitive Bids Accepted        
(i) No. 6 4 15 6
(ii) Amount 32.69 29.256 250 122.959
Partial Allotment Percentage of Non-Competitive Bids        
(i) Percentage 83.2077
(ii) No. (15 bids)
Weighted Average Yield (%) 6.3202 7.0977 6.9781 7.0799
Total Allotment Amount 1000 1000 2500 2500

  Total
Notified Amount 20625
Tenure  
Competitive Bids Received  
(i) No. 1461
(ii) Amount 87387.25
Cut-off Yield (%)  
Competitive Bids Accepted  
(i) No. 364
(ii) Amount 19182.596
Partial Allotment Percentage of Competitive Bids  
(i) Percentage  
(ii) No.  
Non-Competitive Bids Received  
(i) No. 116
(ii) Amount 1477.349
Non-Competitive Price (₹)  
Non-Competitive Bids Accepted  
(i) No. 113
(ii) Amount 1317.404
Partial Allotment Percentage of Non-Competitive Bids  
(i) Percentage  
(ii) No.  
Weighted Average Yield (%)  
Total Allotment Amount 20500
*UT of Puducherry has not accepted any amount in today’s auction

Ajit Prasad
Director   

Press Release: 2021-2022/1099

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LIC’s Jeevan Shiromani: An High Return Investment Opportunity

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Personal Finance

oi-Kuntala Sarkar

|

LIC’s Jeevan Shiromani has been designed by the public insurance corporation as an assured high return savings plan. The scheme is particularly targeted at high net-worth individuals. It is a non-linked, participating, individual, life assurance savings plan.

LIC's Jeevan Shiromani: A High Return Investment Opportunity

Policy benefits and sum assured

The minimum basic sum assured under this policy is Rs. 1 crore, with no maximum or upper limit. LIC informs, “Under this plan, Guaranteed Additions shall accrue at the rate of Rs. 50 per thousand Basic Sum Assured for the first five years and Rs. 55/- per 1000 Basic Sum Assured from 6th policy year till the end of premium paying term. In addition, the policy shall participate in the profits in form of Loyalty Additions.” The Basic Sum Assured will be in multiples of Rs. 5,00,000/-.

Eligibility

Any adult, till the age of 55 years can sign up for this plan. A person of 55 years old can take up this plan for a policy term of 14 years, similarly, a 51 years old can take up this for a policy term of 16 years, 48 years old can take up this for a policy term of 18 years, and a 45 years old can take up this for a policy term of 20 years.

Modes Of Premium Payment

The modes of premium payments are Yearly, Half Yearly, Quarterly, and Monthly, additionally a regular salary deductions (SSS) mode is also available under this plan.

Survival Benefits

The Survival Benefits on the life assured surviving to each of the specified durations during the policy term, a fixed percentage of Basic Sum Assured will be paid, according to the public life insurance corporation.

The fixed percentage for various policy terms has been mentioned as below:

Policy term percentage
For policy term 14 years 30% of Basic Sum Assured on each of 10th and 12th policy anniversary
For policy term 16 years 35% of Basic Sum Assured on each of 12th and 14th policy anniversary
For policy term 18 years 40% of Basic Sum Assured on each of 14th and 16th policy anniversary
For policy term 20 years 45% of Basic Sum Assured on each of 16th and 18th policy anniversary

Maturity Benefit

The Maturity Benefit on the life assured of the policyholder, surviving to the end of the policy term is the Sum Assured on Maturity along with accrued Guaranteed Additions will be paid.

The Sum Assured on Maturity has been mentioned as below:

Policy term percentage
For policy term 14 years 40% of Basic Sum Assured
For policy term 16 years 30% of Basic Sum Assured
For policy term 18 years 20% of Basic Sum Assured
For policy term 20 years 10% of Basic Sum Assured

Death Benefits

If the policyholder dies, during the first 5 years, the Sum Assured on Death benefits along with accrued Guaranteed Additions will be paid. If the policyholder dies, after 5 years of the policy, but before the date of maturity, the Sum Assured on Death benefits along with accrued Guaranteed Additions and Loyalty Addition (if any) will be paid. LIC will count the Sum Assured on Death benefits as the higher of 7 times of annualized premium or 125% Basic Sum Assured. This death benefit will not be less than 105% of all the premiums paid as of the date of death. Premiums are not included any taxes, while the extra amount is chargeable under the policy.

To know more details and application check this official LIC link: https://licindia.in/Products/Insurance-Plan/LIC-s-Jeevan-Shiromani-(Plan-No-947,-UIN-512N315V0

Policy Loan Loan facility is available under this plan, after payment of premiums for at least 1 full year’s premium has been paid and on completion of 1 policy year.

Taxation

As per LIC, “Taxes Statutory Taxes, if any, imposed on such insurance plans by the Government of India or any other constitutional tax Authority of India shall be as per the Tax laws.”



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Reserve Bank of India – Press Releases

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The Reserve Bank of India (RBl) has imposed, by an order dated October 26, 2021, a monetary penalty of ₹7.00 lakh (Rupees Seven Lakh only) on The Citizens Urban Co-operative Bank Ltd., Jalandhar, Punjab (the bank) for non-compliance with certain directions issued by RBI contained in the Master Circular DCBR.BPD. (PCB) MC No.12/09.14.000/2015-16 dated July 01, 2015 on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs’. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949, taking into account the failure of the bank to adhere to the aforesaid directions issued by RBI.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

Background

The inspection report of the bank based on its financial position as on March 31, 2019, revealed, inter alia, non-adherence with/violation of the aforesaid directions, viz., non-identification of NPAs, wrong classification of assets and inadequate provisions made due to wrong classification of assets. Based on the same, a Notice was issued to the bank advising it to show cause as to why penalty should not be imposed for violation of the said directions.

After considering the bank’s reply and oral submissions made during the personal hearing, RBI came to the conclusion that the aforesaid charges of non-adherence with /violation of RBI directions were substantiated and warranted imposition of monetary penalty.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/1098

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Reserve Bank of India – Notifications

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April 14, 2015




Dear All




Welcome to the refurbished site of the Reserve Bank of India.





The two most important features of the site are: One, in addition to the default site, the refurbished site also has all the information bifurcated functionwise; two, a much improved search – well, at least we think so but you be the judge.




With this makeover, we also take a small step into social media. We will now use Twitter (albeit one way) to send out alerts on the announcements we make and YouTube to place in public domain our press conferences, interviews of our top management, events, such as, town halls and of course, some films aimed at consumer literacy.




The site can be accessed through most browsers and devices; it also meets accessibility standards.



Please save the url of the refurbished site in your favourites as we will give up the existing site shortly and register or re-register yourselves for receiving RSS feeds for uninterrupted alerts from the Reserve Bank.



Do feel free to give us your feedback by clicking on the feedback button on the right hand corner of the refurbished site.



Thank you for your continued support.




Department of Communication

Reserve Bank of India


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Bajaj Finance Q2 net up 53.5%

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Bajaj Finance reported a 53.5 per cent jump in its consolidated net profit for the second quarter of the fiscal to ₹1,480.99 crore against ₹964.88 crore in the corresponding period last fiscal.

For the quarter-ended September 30, total revenue from operations increased by 18.7 per cent to ₹7,731.36 crore from ₹6,513.15 crore a year ago.

NII rises

Net interest income for the second quarter of the fiscal increased by 28 per cent to ₹5,335 crore as against ₹4,162 crore a year ago.

Interest income reversal for the quarter stood at ₹322 crore as compared to ₹216 crore in the second quarter last fiscal.

New loans booked during the second quarter were up 75 per cent to 63.3 lakh from 36.2 lakh in the second quarter last fiscal.

Loan losses and provisions for the July to September 2021 quarter stood at ₹1,300 crore as against ₹1,700 crore in the second quarter last fiscal.

“During the quarter, the company has done accelerated write-offs of ₹355 crore of principal outstanding on account of Covid-19 related stress and advancement of write-off policy,” Bajaj Finance said in a statement on Tuesday.

The company holds management and macro-economic overlay of ₹832 crore as of September 30, 2021.

Gross non-performing assets and net NPA as of September 30, 2021 stood at 2.45 per cent and 1.1 per cent respectively, as against 2.96 per cent and 1.46 per cent as of June 30, 2021.

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