MUMBAI : SBI Cards and Payment Services Ltd (SBI Card) has restructured credit card dues of ₹258 crore in the June quarter under the second leg of Reserve Bank of India’s (RBI's) debt recast scheme and has since seen a reduced inflow of requests, chief executive officer (CEO) Rama Mohan Rao Amara told analysts.
“RBI issued the circular in May, and we got the policy approved through the board in June. Our dispensation was available only since the first week of June. In the initial days, we saw a good demand and based on the requests we received from customers and after evaluating their eligibility, we restructured around ₹258 crore," said Amara.
If one compares this to our earlier portfolio of ₹2,700 crore last year, it is not even 10%, he said.
“What we have seen in July is that requests have come down and is not at the same level and we do not see a situation similar to having the same (kind of) portfolio like last year. However, it is too early to comment," he said, adding that the flow of such dues has now come down.
In May, RBI stepped in to rescue small borrowers, allowing lenders to restructure their debt and offer some respite from the stress induced by the second wave of the covid-19 pandemic. Eligible categories included consumer credit, education loan, loans given for creation or enhancement of immovable assets such as housing, and loans for investment in financial assets such as shares and debentures. The second wave was more challenging than the first one last year with mutant varieties of the virus wreaking havoc across the country.
Cost of funds at India’s second largest credit card company stood at 5.2% in the June quarter of FY22, down 27 basis points (bps) sequentially.
“The team has managed the cost of funds very well and used whatever opportunities were available to shedding high-cost borrowings and then substituting them with low-cost facilities," said Amara. However, given the current macroeconomic situation where inflation is running high, he said that further reduction in cost of funds is limited.
Analysts at Motilal Oswal said that on account of a robust distribution and co-branded channels, SBI Card is well-placed to capitalize on growth opportunities, as the market remains significantly underpenetrated. The credit card company witnessed an improvement in asset quality, with gross NPA ratio at 3.91% as on 30 June, as against 4.99% at the end of the March quarter.
“SBI Card reported a steady Q1FY22, amid a challenging environment, supported by lower provisions. Spends have started showing a gradual improvement from Jun 2021. The same is likely to rise further, as economic activity picks up and restrictions ease," the Motilal Oswal note said on Saturday.
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SBI Card recasts ₹258 crore dues in Q1, fewer requests in July, says CEO - Mint
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