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Private sector lender Axis Bank, on Thursday, said it could see a rise in non-performing loans in its retail book in the third and fourth quarter of the fiscal, although the current numbers at present are better than its projections.

“When we came off the moratorium, we saw slightly higher bouncing in September, but since then there has been month-on-month improvement,” said Sumit Bali, President and Head – Retail Lending and Payments, Axis Bank, on Thursday, adding that the collection efficiency is at 97 per cent.

“While the numbers are lower than our internal projection, the situation seems to be getting better for us. There could be some slippage in the third and fourth quarter numbers,” he said at a virtual press conference, adding that the bank expect’s retail asset quality numbers to recover next fiscal.

Axis Bank’s numbers for restructuring requests also continue to be low, said Bali, adding that it is fairly well within its guidance. The lender’s gross non-performing assets stood at 4.18 per cent of advances as on September 30, 2020 against 4.72 per cent as on June 30, 2020, and 5.03 per cent as on September 30, 2019.

When asked about the high NACH bounce rates, Bali said the numbers are not representative of the bank’s business.

Digital offerings

“A lot of fintechs doing small-ticket loans skew the bounce rates,” he said. Meanwhile, in the wake of outages in mobile apps and internet banking services of two banks, Axis Bank has increased audits and is also trying to make pro-active investments in its own digital offerings.

“Our customers have had no reason to complain...these things can happen to anyone,” noted Sameer Shetty, Executive Vice-President and Head – Digital Banking and Transformation, Axis Bank.

Responding to a query, Shetty said the bank does regular audits and checks. “The last one was in October and went through seamlessly,” he said, adding that it has also started conducting out-of-turn audits.

“These are areas of ongoing implementation. One needs to invest ahead of the curve,” Shetty further said.

Both State Bank of India and HDFC Bank have, in the recent past, faced outages in their digital banking services. Reserve Bank of India Shaktikanta Das had also urged banks to invest proactively in technology.