Tag: a s rajeev

BoM earned a net profit of Rs 165 crore in the January-March quarter. The bank has recovered Rs 508 crore from the toxic account of Bhushan Power and hopes to get another cheque of almost the same amount from IL&FS soon. In an interaction with ETBFSI, A S Rajeev, MD & CEO of Bank of Maharashtra, said he does not see a major impact of the second wave for his bank. He also mentioned that they are seeing notable results of end-to-end digital lending platforms which they have created. Edited excerpts.

Q. Is there any other account other than Bhushan Power in the future where you are expecting some big recoveries?

The amount may not be as huge as Bhushan, but there are a number of accounts in different stages, and the amount may vary between Rs 50 crore to Rs 100 crore. But we are expecting something big from the IL&FS account, it will take some time though. We are expecting between Rs 500 crore to Rs 600 crore from it. Most of the accounts we have fully written off, it will help us to improve the profitability.

Q. How much did you disburse under ECLGS? Are you also keeping funds ready to disburse to MSMEs once the second wave ebbs? Have you spotted new SMEs?

We have lent around Rs 2,400 crore under this scheme. Our MSME growth last year was 36%. Out of that 12% came from ECLGS scheme. Now most of this, about 90-95%, we have already disbursed. Repayments on these accounts are on schedule. The total MSME accounts we restructured were around Rs 650 crore. To attract MSMEs, we have launched a scheme ‘Ghar Wapsi’, we have the database of the last 5-6 years, and we are approaching those customers who left us. Such accounts are in the range of Rs 500-600 crore. We expect around Rs 1,500-1,600 crore of advances in this segment. Also, this year our agriculture portfolio grew 13-16%. There was a good monsoon, and with settlement schemes, we had a good recovery. This year, we created another portfolio of gold loans. It also picked up really well with Rs 2,000 crore jewellery loans. We reduced our interest rates to the lowest in the industry.

Q. The second wave is grappling the country far more significantly. Do you see challenges in recovery, collections?

At present, there are no major challenges. We have not started to see such difficulties yet. Since we are flagging the account status every month, we performed the portfolio analysis in April and didn’t find something challenging. What we are seeing is that stress in the portfolio is not there like the last time during complete lockdown that happened for one, one and a half month. So there is no stress at present in the portfolio or the repayments. Also, it’s local lockdown and has not started affecting the economy. If it continues for some more time, it may affect the economy. Our feeling is that in another 1-2 weeks the situation may change.

Q. Do you see a slowdown in credit demand this quarter?

Generally, the first quarter of the FY is always negative. It is either negative or the growth rate would be 1-2%. Because banks are busy with miscellaneous things such as audits, transfers, promotions, etc. My experience states that there is not much of credit growth during the period of April and May. So even if the economy is affected by slightly localised lockdown, it will be hit only corporate customers. Sowing starts in June, so agricultural lending will start from then. So if you see a 14-16% growth rate per year in any banking system, either it is negative by 1-2% or positive by 1-2% in the first quarter. So geometrically you can see that if 2% is the growth rate in June, for the second quarter it would be 4-5%, for the third quarter it would be 8-10% and so on.

Q. What kinds of digital adoption has BOM done recently? What kinds of digital capabilities are you building?

We have digital products out there. Last year, we incorporated Loan Management System, which is end-to-end digital for loan advancement or sanctioning loans. There is no cap here on the loan amount. Any amount including corporate loans can be disbursed digitally on the Loan Management System. MSMEs can upload their documents to the system. There are certain agencies we have integrated with such as the income tax department, sales tax department, Crisil, Google reports, etc, which undertake the task of vetting as well. It is done parallelly within 2-3 minutes. There is no manual intervention. Only final approvals have to be done by respective authorities. We have also put in place SAP models. There are some models we are still working on and making changes like UAT. Our entire audit system is digitised. An auditor need not go to any other place. Sitting in their place they can do the audit. Digital signatures are also used, and in every area, 100% digitisation has been made. With such an efficient system, it also helps us in declaring our quarterly results early.