InvestorQ : Why has ICRA downgraded the outlook for Bandhan Bank?
Niti Shenoi made post

Why has ICRA downgraded the outlook for Bandhan Bank?

ishika Banerjee answered.
11 months ago

ICRA has not downgraded the ratings but has only downgraded the rating outlook on Bandhan Bank from stable to negative. This does make the bank more vulnerable to downgrades in the future although the current rating has been reaffirmed by ICRA. According to ICRA, the gross pool of stressed assets as a percentage of total loans given out increased from 29.4% to 36%. Stress Pool is the aggregate of gross NPAs, gross restructured assets and special mention accounts or SMAs.

Out of its total stress pool, ICRA had provisioned 49% based on estimated collections and recoveries. It targets to improve collections six fold by March 2022. It has a large hole in the Assam Microfinance Portfolio and is likely to fall back upon the Credit Guarantee Fund for Micro Units worth Rs.3,000 crore. It had reported net losses in the quarter with Tier-1 capital ratio falling more than 400 bps. ICRA expects further provisions.