KOCHI: Kerala’s Federal Bank said it has about Rs150 crore ($20 million) exposure to UAE Exchange House, a subsidiary of Finablr, which is majority owned by the financially battered UAE-headquartered NMC Health’s founder BR Shetty.
Several banks from the Middle East, especially from the GCC, such as ADCB, Commercial Bank International (CBI), Commercial Bank of Dubai (CBD), National Bank of Fujairah (NBF), National Bank of Umm Al Quain (NBQ), Arab Banking Group, etc are reported to have lent hundreds of millions of dollars to the money exchange major that had played a pivotal role in the money transfer to India from the GCC during the past few decades.
Briefing on the moratorium, the Federal Bank top official said out of the total loans of Rs1,24,153 crore, 35 per cent or loans worth Rs43,067 crore have opted for the facility, with 79 per cent of loans at Rs8433 crore from the business banking portfolio opting for moratorium.
Shyam Srinivasan, the MD and chief executive of the bank, said though the moratorium has been extended for a further three months until August, the number of takers is likely to come down as it would work out as an expensive proposition for the borrowers at the end of the day.
Responding to the ‘Rs21 lakh crore’ revival package recently announced by the Union Finance Minister to combat the impact of COVID 19, the Federal Bank top official said the bank would be keen to support the scheme, especially the credit guaranteed loan scheme announced for the MSMEs. Federal Bank said this is a good lending opportunity and would set aside Rs2000 crore for the scheme.
“This will work certainly in favour of the bank, more so because these loans do not attract any capital charges as they are guaranteed by the government rendering it a zero risk asset class,” the official added.
As many banks have been lately doing, Federal Bank, which sits on a comfortable liquidity, has also built a decent portfolio of gold loans with the portfolio reaching Rs9300 crore as of March 31, 2020.
Federal Bank closed the fourth quarter with an year-on-year drop in net profit of 21.04 per cent from Rs381.51 crore to Rs301.31 crore. However, for the full year, FY20, the bank saw its net profit grow by 24.03 per cent – from Rs1243.89 crore to Rs1542.78 crore.