Coronavirus lockdown not likely to increase NPAs: HDFC's Keki Mistry

The nationwide lockdown for 21 days announced by the government in order to slow down and stop the spread of the coronavirus pandemic is not likely to increase non-performing assets (NPAs), HDFC Vice Chairman (VC) and Chief Executive Officer (CEO), Keki Mistry told Zee Business Executive Editor, Swati Khandelwal today in an interaction.

Mistry, however, feels that the lockdown could "realistically" pose challenges in recovering money from the customers. He added that this will be a short term issue.

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#CorporateRadar | कोरोना के असर से NPA ज्यादा नहीं बढ़ेगा, RBI को लोन रीपेमेंट का समय 90 दिन से बढ़ाकर 120 से 180 दिन करना चाहिए: केकी मिस्त्री, VC & CEO, HDFC#CoronaVirus #COVID19 #HDFC #RBI @SwatiKJain @HomeLoansByHDFC pic.twitter.com/doZHWNcQR2

— Zee Business (@ZeeBusiness) March 26, 2020

For HDFC, Mistry foresees only a marginal increase in NPAs, "if at all" there is an increase.

Mistry suggested that the Reserve Bank of India (RBI) should tweak the definition of NPAs which is currently at 90 days. He recommended hiking it to 120/150/180 days.

The VC further said that the RBI needs to infuse enough liquidity in the financial system, considering the current situation.

He also said the RBI should also permit a one-time restructuring of loans in sectors where there is stress. As an example, he said that real estate sector needs restructuring.

On the issue of rate cut in the upcoming Monetary Policy meet, Mistry said that he does not see a rate cut making a material impact, as the banks had money but were not willing to lend because of their aversion to risk.

While the financial system is currently cautious towards lending, the phenomenon was more prevalent among the state-run banks, he said.

Mistry also said that though the companies can declare their results till June, but listed companies with foreign listings may not want to delay.

The only reason why RBI and SEBI have allowed late declaration because of the inability of accountants and recovery staff to go to to offices.

The entire financial system including banks, housing finance companies, NBFCs should be allowed some forbearance, Mistry averred.

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Mistry also saw some challenge in growth for the April-June quarter but expects things to get back to some degree of normalcy in one month's time.