Indian Bank estimates a better response to loan restructuring under the Resolution Framework 2.0 announced by the Reserve Bank of India earlier this month.

“We expect that this year we would probably be doing between 1.5-2 per cent. That is the initial estimate. We will need to see how the appetite for restructuring builds up,” said Padmaja Chunduru, MD and CEO of Indian Bank, on announcement of the bank’s quarterly result on Friday.

The PSU lender disclosed that only 0.72 per cent of the standard advances as of March 31, 2020 under retail, MSME, agriculture and corporate was restructured under the previous framework.

With 19 per cent of the domestic advances in the MSME segment as of March 31, 2021, the bank has seen a jump in the fresh slippages in the segment worth Rs 2,921 crore for the fourth quarter of 2020-21 against Rs 801 crore a year ago.

“The RBI has given the dispensation for restructuring and MSME which is the most vulnerable among our portfolio, we expect restructuring to happen,” Chunduru said adding that the bank expects the slippage ratio to remain close to a similar level of around 2.8 per cent last year.

Indian Bank on Friday reported a net profit of Rs 1,709 crore in the March-ended quarter.

The lender had posted a net loss of Rs 1,641 crore in the same quarter of the preceding financial year 2019-20.

Sequentially, the bank had posted a net profit of Rs 514.29 crore in the December quarter of the financial year 2020-21.

Gross NPA at 9.85 per cent of the gross advances as of March 31, 2021 was lower than 11.39 per cent as of March 31, 2020.

The board of the bank has recommended a dividend of 20 per cent for 2020-21.

Keeping in mind the adverse impact of the second wave of the Covid pandemic, the RBI had announced another window of restructuring for vulnerable borrowers – individuals, small businesses and MSMEs with an aggregate exposure of not more than Rs 25 crore as of March 31, 2021 subject to certain eligibility conditions. The restructuring under this framework has to be invoked by September 30, 2021 and implemented within 90 days of invocation.

With 19 per cent of the domestic advances in the MSME segment as of March 31, 2021, the bank has seen a jump in the fresh slippages in the segment worth Rs 2,921 crore for the fourth quarter of 2020-21 against Rs 801 crore in the corresponding year ago period.