How the second wave of Covid will play out is a challenge: BoM chief
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Bank of Maharashtra (BoM) could figure among the top three public sector banks (PSBs) in terms of efficiency parameters and asset quality if its current performance continues for the next couple of years, according to MD and CEO AS Rajeev.
The bank, which posted net profit for nine quarters on the trot up to the fourth quarter of FY21, has adequate capital to ensure a 20-22 per cent growth in RAM (retail, agriculture and MSME) advances and about 10-12 per cent growth in corporate advances in FY22, he said. In an interaction with BusinessLine, Rajeev said BoM will grow its gold loan portfolio to at least ₹4,500 crore from ₹2,000 crore in FY21. Excerpts:
What are your business targets for FY22?
We want to grow our advances portfolio by 14-15 per cent (last year net advances grew 18 per cent) and deposits by 10-12 per cent (16 per cent). Within the advances portfolio, we will grow our corporate advances by ₹4,000-5,000 crore (against contraction of ₹862 crore in FY21), otherwise RAM sector advances in total advances will increase to 70 per cent (currently 63 per cent).
The advances target in FY22 is lower because the base in increasing. But in absolute terms, the growth will be higher.
What challenges do you see in growing advances?
How the second wave of Covid-19 pandemic will play out is a challenge. Now, company sales have started coming down. For example, two-wheeler and passenger vehicle sales declined in April 2021 vis-a-vis March 2021.
In specific areas, there may be issues because of local lockdowns. If lockdowns continue, MSME (micro, small and medium enterprises) is one segment where there may be some difficulty because last year we had restructured some of the accounts.
Are you expecting any big recoveries in FY22?
We are expecting ₹200-250 crore recovery from the resolution of DHFL and ₹250-300 crore from IL&FS Group. With the help of one-time settlement scheme for the agriculture sector, we were able to bring down non-performing asets (NPAs) in the sector from 26 per cent as of March-end 2020 to about 21 per cent as of March-end 2021. This may come down further to about 15 per cent by March-end 2022.
Have you identified stressed assets that you will transfer to the National Asset Reconstruction Company?
We will transfer 4-5 stressed accounts, which have been fully provided for, aggregating ₹700-800 crore to NARCL.
Are you planning to raise capital?
Our capital adequacy was at 14.49 per cent as of March-end 2021. Out of this Tier-I capital was at 10.98 per cent. So, there may not be any requirement to raise capital to support loan growth.
But we have already taken permission from the board for raising ₹5,000 crore. This is an enabling provision. If there is any requirement or the market situation turns conducive, we may go for further public offering or a qualified institutions placement.
As per SEBI regulations, the minimum public shareholding in a listed company should be 25 per cent. The government holds 93.33 per cent stake in our bank.
This has to come down to 75 per cent. So, we want to increase the public shareholding to at least 20 per cent.
Has your bank made any structural changes to improve its operations?
We have put in place a Loan Lifecycle Management System to reduce the Turn Around Time (TAT) of loan proposals. We are centralising loan sanctions in the RAM segment. The corporate branches, which deal with loan proposals of ₹100 crore and above, are now reporting directly to the head office (HO). This has cut the TAT. Earlier, the corporate branches used to report to the zonal office, which, in turn, report to the HO.
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