NPA definition of 90 days should be increased to 180 days: Keki Mistry, VC & CEO, HDFC

Keki M. Mistry, Vice Chairman and CE, Housing Development Finance Corporation, talks about challenges that the financial sector is seeing and time given for quarterly reports among others during a candid chat with Swati Khandelwal, Zee Business.

Edited Excerpts: 

Q: What is your view on the challenges that the financial sector is witnessing amid coronavirus and how you will deal with it?

A: I don’t think that NPA will go up but realistically you can’t reach the borrowers to provide the bill neither can contact them. Thus recovering/collecting money from these people could be a big challenge. But, this will be a short term issue and will not create any problem for the long term. I think the RBI should increase the NPA definition from 90 days to 120-180 days. RBI has to put enough liquidity in the system to ensure that the liquidity continues to remain normal. Besides, it, the RBI, should permit a one-time restructuring of loans in the sectors that are under stress, like the real estate. There is a need for this one-time restructuring at present.

Q: Do you foresee a rate cut in the coming policy announcement?

A: Rate cut will not have any big impact, as demanded by several people. If it is announced then it is good and if not done then also it will work, but the banks have money but are not willing to lend it because of risk averseness, which should be removed from the entire banking system especially the public sector banks. 

Q: Corporates have been given time to announce its quarterly results till June 30, 2020. How it is going to help corporates?

A: You can present your quarterly results till June but the listed companies with foreign listing would not like to do it. Secondly, the problem is that if the accounts and recovery people can’t go on the work and for that purpose, the RBI and SEBI has announced certain measures. But more important is that the RBI should put enough liquidity in the system so that ample liquidity is there in the system. Thirdly, it should permit one-time restructuring of all loans of certain sectors.

Q: Can you foresee a time when we can say that the situation is under control and the worst is behind us and we are heading towards normal? 

A: It is difficult to guess a time till which this coronavirus will continue to have its impact and the shutdowns will continue. But in my view, growth challenges can be seen in the next quarter (April-June quarter) but hopefully, in the next one month, things should come to some degree of reasonable normalcy, if attained, then it would bring economic normalcy in the next two or three months. 

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Q: Can you please quantify the kind of impact that the current situation will have on MSME and retail portfolio? 

A: Quantifying anything is very difficult because almost everything is changing on a day-to-day basis. If you look at our business than there can be a marginal increase in NPA but it will not have any big impact because if someone has taken housing or car or consumer loans or credit card. Housing loan is the most secured loan, so no one does something that will have an impact on recovery.