Thomas expects that slippages in FY22 would remain under control in the range of 3-4%.

ESAF Small Finance Bank expects normalcy in business from July with collections already seen improving in some states like Maharashtra.

The bank could also list as early as September 2021 after refiling the draft red herring prospectus (DRHP) for its initial public offering (IPO) with the market regulator Sebi. The Thrissur-based lender feels that total business this fiscal would be not be as bad as FY21 as the lockdown is only regional unlike last year.

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“Already Maharashtra is showing good promise and collections are good at 75%. In Tamil Nadu too, the collections were at 65% when the new lockdown was imposed.

Last year there was a national lockdown and collections were stopped for almost five months due to the moratorium. Once the lockdowns are over things will be back to normal,” K Paul Thomas, MD & CEO of ESAF, said. He estimates advances to grow by 65% in the current fiscal while deposits could increase year-on-year by 50%.

In FY21, total business registered a 25.85% growth from Rs 13,846 crore for the year ended March 31, 2020, to Rs 17,425 crore for the year ended March 31, 2021.

The lender reported a 44.64% year-on-year decline in its FY21 net profits to Rs 105.40 crore, largely due to higher provisions. ESAF reported gross NPA ratio at 6.70% and net NPA at 3.88% for the fiscal 2020-21.

“Our gross NPA was down to 10% in December 2020. Collections improved significantly in Q4 to 94% by March, and we were hoping to end the fiscal with an improvement in asset quality when the second wave hit,” Thomas said. He added that the Bank as a prudent measure holds provision in excess of the RBI requirement in the standard category to the extent of Rs 91 crore as on March 31, 2021.

Thomas expects that slippages in FY22 would remain under control in the range of 3-4%.

“We are very confident of bouncing back quickly in the second quarter as our customers have seen such calamities in the past. After the moratorium period, we could improve our collections to almost 94% in the last fiscal,” he added.

About 85% of the total advances of the bank is micro-loans with the average ticket size being Rs 20,000. Currently, gold loans have an 8% share of the total advances and the bank is planning to focus on gold loans, MSME, affordable housing and agri-loans in the fiscal .

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