Mumbai: State-owned Bank of Baroda (BoB) will rely on the strength of its corporate book to tide over the second wave, even as small businesses and retail loans could cause some discomfort.

Sanjiv Chadha, chief executive of the bank said on Saturday that as far as the second wave is concerned, the bank is likely to see pretty much a repeat of what it witnessed last year.

“Last year, we were not confident what would happen to the corporate sector. This time, we can say with confidence that the second wave has largely left the large corporate businesses untouched," said Chadha.

The lender has a corporate loan book of Rs2.92 trillion, almost unchanged from the last financial year. It’s retail and micro, small and medium enterprises (MSME) book stood at Rs1.2 trillion (14.4% higher than FY20) and Rs96,200 crore (10.2% growth), respectively.

According to Chadha, even for corporate accounts which were relatively weaker and had got restructured last year, there would be no need to revisit in most cases.

“Given the fact that 50% our book is corporate, it is the performance of the corporate loans which will define the overall impact on the bank," he said, adding that as was the case with the first wave, the impact is going to be more as far as retail is concerned and significantly more for MSMEs.

So, the areas of concern remain the MSME sector and to a lesser extent, the retail sector, he said. However, Chadha believes that some of the recent measures announced by the Reserve Bank of India (RBI), like another round of debt recast, will aid borrowers.

On 5 May, RBI stepped in to rescue and small business borrowers with loans of up to Rs25 crore, allowing lenders to restructure their debt and offer some respite from the stress induced by the second wave of the covid-19 pandemic.

Eligible categories would include consumer credit, education loan, loans given for creation or enhancement of immovable assets like housing, and loans for investment in financial assets like shares and debentures. In a separate notification, the central bank also allowed MSMEs with loans of up to Rs25 crore to be eligible for recast under what it calls Resolution Framework 2.0.

“We have the tools to address the issues that would arise from the second wave. We believe that our overall credit quality continues to improve, largely driven by the fact that the corporate credit book will keep on moving," he said.

On retail loans, while there will be some stress but since the bank underwrites solely on the basis of credit scores the quality of the book is very good and withstood the impact of the pandemic, he said.

“Post-moratorium, our borrowers came back and paid us, and we also have the additional possibility for again addressing any issue through restructuring. However, I feel that retail borrowers are very careful in opting for recasts. While there might be some delinquency in one or two instalments, but the overall book should come through," he added.

The bank reported a loss of Rs1,047 crore in the three months to March 2021 as against a profit of Rs507 crore in the same period last year. The loss, it said, was primarily because it shifted to the new tax regime under Section 115BBA of Income Tax Act and faced was a one-time impact of Rs3,314 crore.