Banks on sticky wicket in NE states amid CAA stir, business impacted

Microlender turned universal lender Bandhan Bank also said it was impacted by the troubles in the North East, but added those were not “exceptional”

Two private sector lenders on Tuesday said their business was impacted due to the fallout of the anti-Citizenship Amendment Act (CAA) protests in Assam last month, with the poor borrowers segment being the most hit.

IndusInd Bank and Bandhan Bank, which have come out with their December quarter earnings, reported a dip in micro lending activity because of the protests and hoped that the troubles will end soon.

Anti-CAA protests had engulfed large parts of Assam in the days leading to the passage of Citizenship Amendment Bill (CAB) and after it was passed by both Houses of Parliament, as the locals feared that the law could result in a fresh influx of outsiders.

"It is better to lose business temporary rather than getting hit from a long-term perspective,” a senior executive from IndusInd Bank told PTI.

The bank recently acquired a dedicated microlender Bharat Financial and also entered Assam market. It has a book of over Rs 53 crore in the northeastern state, the official said, adding it lent only Rs 4 lakh in the state in December.

It also went slow in West Bengal, a mature market for MFIs, because of the CAA-related protests, and also due to concerns like over-borrowing and other risks perceived by the bank, the official said.

“If not for the issues in Assam and West Bengal, our disbursements of Rs 3,200 crore in December would have been higher by Rs 200 crore,” the official said.

Its chief executive C S Ghosh said it had to make an extra provision of Rs 200 crore on small ticket loans made in Assam, clearly indicating that repayments have suffered.

He said the bank has a portfolio of Rs 6,500 crore in Assam, which is 10 per cent of the overall loan portfolio, and added that impact of such an episode can last up to two months.

He, however, said loan demand has not been hurt if one were to believe the bank's reports from the ground.

The statements from the two banks follow similar announcements by other enterprises including Tata Group's watch making arm Titan, which last week disclosed that sales have been impacted in North East and other parts of the country due to forced store closures.