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Bank of Maharashtra to increase corporate loan portfolio

Revival of subsidiary, Metco, also on the anvil

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At a time when most banks are facing stress in the corporate segment and are turning their focus to  the retail segment, Pune-headquartered is doing just the opposite. The bank's Chairman and Managing Director, Narendra Singh, says they plan to focus on getting 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 now. We plan to take it to 50 per cent in this financial year,” he said.

Being a small bank, it is possible to sanction and approve loans faster, which should work in favour of the the bank, says CVR Ranjendran, Executive Director, BoM. “For this reason big corporates are willing to consider us for their additional loan requirements,'' he says.

The low exposure to corporate loans was why BoM was able to maintain its asset quality. Its ratio of gross non performing assets reduced to 2 per cent as on end-September 2012, from 2.15 per cent last year, while the net ratio reduced to 0.88 per cent (0.97 per cent.)

Currently, retail segment accounts for 11 per cent of total advances, agriculture - 11 per cent, micro small and medium sector-25 per cent, and housing loans to NBFCs -16 per cent.

As on September 30, 2012, total deposits were at Rs 86,542 crore and total advances were at Rs 68,778 crore.

Singh said they are seeing selective revival in credit demand from manufacturing and real estate firms.

To boost its home loan portfolio, the bank is looking to tie-up loans to real estate projects with home loans. “We are lending to builders for housing projects and we are getting good yields from it. If these builders get us home loan borrowers, we offer the builders a lower rate for the next housing project loan,” explains Ranjendran. The bank's exposure to commercial real estate currently stands at Rs 2,463 crore, almost 4 per cent of gross advances.

As part of the plan to push up retail home loans, the bank is offering longer tenure home loans of up to 30 years and higher amounts under top-up home loans, up to Rs 10 lakh. These steps are expected to increase the share of home loans from the current outstanding of Rs 5,442 crore.

In order to increase the share of retail loans to 20 per cent, the bank is also looking to increase volumes in segments like trade finance, auto loans and gold loans, Rajendran said.

About the fall in NPAs, Singh said BoM has made good use of the Sarafesi Act (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act). It has recovered Rs 900 crore in the past five years and about Rs 169 crore in the first half of the current financial year.

There are also plans to revive Maharashtra Executor and Trustee Company (METCO), the wholly owned subsidiary which offers services like preparation, execution and safe custody of wills, trust deeds for both - public and private trust, it acts as trustee of property, power of attorney for minors and handicapped children. It was incorporated in 1946 and has 3,500 accounts at present.

“There is good demand for these services and we plan to scale it up. We will hire a CEO from the market and hire people with the right skill set,'' he said.

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