Bank of Maharashtra to boost corporate loan portfolio

Last Updated: Mon, Nov 12, 2012 19:40 hrs

At a time when most banks are seeing stress in the corporate segment and are focusing on the retail front, Narendra Singh, chairman and managing director of Pune-headquartered Bank of Maharashtra, says the bank plans to focus on bringing more corporate clients on board. “We plan to change our loan composition in favour of corporates. Corporate business has grown from 37 per cent in the first half of the year to 42 per cent. We plan to raise this to 50 per cent this financial year,” he said.

Executive director C V R Rajendran said as the bank was a small-sized one, it was possible to take sanctions and approve loans faster, and this would work in its favour. “For this reason, big corporates are willing to consider us for their additional loan requirements,” he said. Since the bank had low exposure to corporate loans, it was able to maintain good asset quality. As of September-end, its gross non-performing asset (NPA) ratio stood at two per cent, against 2.15 per cent last year. The bank’s net NPA ratio fell from 0.97 per cent to 0.88 per cent in the same period.

Currently, the retail segment accounts for 11 per cent of the bank’s total advances, agriculture 11 per cent, the micro small and medium sector 25 per cent and housing loans to non-banking financial companies 16 per cent. As on September 30, total deposits stood at Rs 86,542 crore, while total advances stood at Rs 64,778 crore. Singh said the bank was seeing a selective revival in credit demand from manufacturing and real estate companies.

To boost its home loan portfolio, the bank is considering tying up loans to real estate projects with home loans. “We are lending to builders for housing projects and are getting good yields. If builders get us home loan borrowers, we offer the builders a lower rate for the next housing project loan,” said Rajendran. The bank’s exposure to commercial real estate segment stands at Rs 2,463 crore.

To push retail home loans, the bank is offering tenures of up to 30 years. It is also offering higher amounts under top-up home loans—up to Rs 10 lakh. It is expected these steps would increase the bank’s home loans from the current dues of Rs 5,442 crore. To raise the share of retail loans to 20 per cent, it plans to increase volumes in segments like trade finance, automobile loans and gold loans, Rajendran said.

On the fall in NPAs, Singh said Bank of Maharashtra had made good use of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act. In the past five years, it had recovered Rs 900 crore and in the first half of the current financial year, it recovered about Rs 169 crore.

The bank also plans to revive Maharashtra Executor and Trustee Company (Metco), its wholly-owned subsidiary, which offers services like preparation, execution and safe custody of wills and trust deeds for public and private trusts. It also acts as a trustee of property and power of attorney for minors and handicapped children. Incorporated in 1946, Metco now has 3,500 accounts.

“There is good demand for these services and we plan to scale it (Metco) up. We will hire a chief executive from the market, as well as other people with the right skill sets,” Singh said.

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