AU Small Finance Bank in Q4FY21 saw a very sharp deterioration in asset quality. The gross NPA is up 48 percent and slippages have spiked around 75 percent this quarter.

Sanjay Agarwal, MD & CEO of the bank said that the gross NPA would have been 3.3-3.4 percent for Q4FY21 without the Supreme Court dispensation.

“Q4 was a super quarter in terms of collection and we reduced the 90 plus numbers by close to Rs 50 crore. But because of the April 7 order of Reserve Bank of India (RBI), which says that as per the BASEL norms you need to create an NPA pool from September 1 because that was not allowed because of Supreme Court order from September 3 to March 23. So, that gives us little bit an upper side on the NPA level,” he said in an interview to CNBC-TV18.

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He said that they have made adequate provisions and have also made additional provisions on restructure assets.

“From last March we started building the provision coverage. The 90 plus as on March 31 carries around Rs 750 crore and it also includes some portion from lesser than 90 days GNPL. So, in my opinion, we have coverage of around 65-70 percent. We built more contingency provision of Rs 70 crore. So, my overall provision is close to Rs 1,000 crore in the book where the NPAs, strict 90 days, are around Rs 1,000 crore,” he said.

Agarwal also said that the delay in announcement of Chief Audit officer was a mistake. “In hindsight, I should admit that our communication should have been sharper and clearer,” he said.

“There has to be certain privacy and HR practices that once a guy says I want to go away, it is not easy for us to just let him go. So we did talk to him and that took some time and he was not willing to stay back. We asked him to stay back and complete the audit for this year because in mid if any auditor goes, it is not good for me. The next audit committee, because he reports to audit committee, which happened on March 25, his resignation was accepted. He has signed off on the Q4 numbers,” he said.

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(Edited by : Abhishek Jha)