ujjivan bank: loan collection is improving, according to Ujjivan Small Finance Bank

Ujjivan Small Finance Bank, which is going through a management crisis, said its loan recovery had improved and its portfolio at risk had been reduced in August.

The bank said its action plan to improve asset quality has started to bear fruit. Portfolio at risk (PAR) was reduced to 21.7% from 30.8% in June with a loan recovery of Rs 725 crore. The PAR was 25.2% in July. The lender’s collection efficiency improved to 95% in August from 93% in July, according to a regulatory filing to the exchanges.

Chief executive Nitin Chugh resigned on August 18 after the bank’s holding company, Ujjivan Financial Services, sounded the alarm over its alleged poor management of asset quality and human resources. The bank has experienced a series of senior and middle management departures. Several board members have also resigned ahead of their scheduled terms over the past year.

The gross ratio of non-performing assets rose further to 11.9% at the end of August, from 10.8% a month ago.

The bank said it follows a 100-day action plan for each line of business with a focus on reducing PAR and recovering bad debts with periodic monitoring and corrective action. Emphasis is placed on initial buckets and vintage of accounts to reduce PAR and further strengthen the collection team and legal collection of small business loans and affordable housing loan portfolio.

Its gross loan portfolio increased slightly to Rs 14,334 crore at the end of August from Rs 14,137 crore a month ago. The gross loan was Rs 15,140 crore at the end of March. Unsecured microfinance loans represent 67% of its total portfolio.

The bank’s restructured portfolio rose to Rs 1,405 crore from Rs 769 crore at the end of June.

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