MUMBAI: Private banks continue to feel the pain of defaults in the microfinance segment. Kotak Bank and RBL Bank which declared their earnings on Saturday, both reported higher defaults in the microfinance segment.
Kotak’s consolidated net profit for the quarter ended Dec 2024 was up 10% at Rs 4,701 crore from Rs 4,265 crore in the corresponding quarter last year. The bank’s standalone net profit was also up 10% at Rs 3,305 crore. However, the group’s microfinance arm BSS reported a loss of Rs 50 crore for the quarter as against a profit of Rs 104 crore in the corresponding quarter last year.
RBL Bank reported an 86% decline in its net profit to Rs 33 crore after the bank’s provisions for the quarter jumped twofold to Rs 1,180 crore because of an additional Rs 414 crore on its joint liability group loans (JLG). JLG loans are micro advances made to borrowers as a group. According to Kotak Bank MD & CEO Ashok Vaswani, the asset quality in all personal loans is stable except microfinance which is seeing an industry-level issue.
“As far as microfinance is concerned, we are continuing to see an increase in delinquencies. The rate of deterioration has come down and that gives us comfort that in the next two to three quarters this will plateau and start coming down,” said Vaswani.
Last month, IndusInd Bank sold Rs 1,573 crore of non-performing microfinance retail loans, amid mounting stress in the sector.
Stay informed with the latest Business News on Times of India. Explore the list of Bank Holidays, stay informed about Budget 2025, discover the new Income Tax Slabs, and use the Income Tax Calculator for hassle-free tax planning.
Unlock Investment Potential: Enroll in ET's Stock Valuation Workshop - Batch 3. Secure Your Spot Now!