PNB Housing Finance expects to manage its bad loans better from this month onwards, when the deadline of going soft on borrowers provided by the courts ends on August 31, and would ask the borrowers to start repaying if they are capable to do so, a top company official said.
The company's gross non-performing assets (NPAs) jumped to six per cent of the gross advances (or Rs 3,625 crore) in the quarter ended June 30, 2021, from 2.7 per cent by the end of June 2020, mainly on account of the impact of the second wave of the pandemic.
The increase in NPAs is also on account of legal forbearance up to August 31, 2021, as per high court orders, the company said after its June quarter earnings last week.
Various courts and high courts across the states indicated to the lenders not to take any legal or administrative action during the second wave of the pandemic, which mainly spread during April and May.
"During the quarter, there were 45 days of lockdown. So, there was hardly any activity in this period.
"We expect to manage these better from this month onwards even as we have managed to pull back some NPAs. We have pulled back about Rs 80 crore of NPA in July itself," Hardayal Prasad, managing director and CEO of PNB Housing Finance, told PTI in an interview.
The restrictions led to a little bit of problems on the recovery front, he said.
He added that if someone has borrowed money from the company, the person is bound to return it unless there is a demise in a family, or someone's business is wiped out.
"But, if you have borrowed, your business is running. I have every right to ask for my money," Prasad said.
However, the company will be considerate enough to find a solution on a case-to-case basis, if there are genuine borrowers facing any kind of problem to repay, he added.
The company's COVID-19-related restructured loans stood at Rs 1,733 crore as of June 30, 2021.
It posted a five per cent fall in its net profit to Rs 243 crore in the first quarter ended June 2021, as against Rs 257 crore in the year-ago quarter.
The company, promoted by Punjab National Bank, said its collection efficiency was the lowest in May due to the second wave of the pandemic. However, it witnessed an uptick in June and further in July, it added.
On being asked about the Carlyle-led deal of Rs 4,000-crore equity capital infusion, the matter related to which is awaiting final order from the Securities and Appellate Tribunal (SAT), Prasad said: "It is a sub-judice matter. So, we are not commenting on that part."
"Once they (SAT) come out with an order, we will take a call," he said.
Markets regulator Sebi in June had asked the company to go for valuation of the issue price of Rs 390 a share for the deal from an independent registered valuer.
Currently, the stock price of PNB Housing Finance is trading at over Rs 700 apiece on the stock exchanges -- BSE and NSE.
However, PNB Housing Finance approached SAT on the matter, and the final order is awaited as both the parties, Sebi and PNB Housing, are understood to have completed their arguments in the case.
On the US-based Carlyle group-led equity investment in the company announced on May 31, controversy erupted after a proxy advisory firm SES said it was not in the interest of the minority shareholders of the company and that the deal was ultra vires of the company's Articles of Association (AoA).
Following this, Sebi restrained PNB Housing Finance from going ahead with shareholders' voting on the proposed Rs 4,000-crore deal with Carlyle group, and directed the company to carry out the valuation process as per the relevant legal provisions.
PNB Housing Finance has said that it has acted in compliance with all relevant applicable laws, including the applicable pricing regulations prescribed by Sebi, and the company's AoA.
The preferential allotment is in the best interest of the company, it said in June.
The company has not raised any equity capital in the past three years, except equity shares issued under the employee stock option plan.
Earlier in February this year, the Reserve Bank of India (RBI) had rejected PNB's proposal for a capital infusion into its subsidiary PNB Housing.
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