BoM: Crop damage from hailstorms not to hit bottomline

Asserting that the damage caused by the massive hailstorms in the State this month will not impact its asset qualities, Bank of Maharashtra (BoM) today said the process of rescheduling farm loans will start soon.
Even if the State does not declare a washout, there is a provision under the RBI norms under which a competent officer at the local level can give a certificate of crop damage due to natural calamities," BoM Chairman and Managing Director S Muhnot said.
The Pune-headquartered state-run bank's Q3 gross NPAs stood at 4.01 per cent. This is more than average of the all state-run banks' gross NPAs, which touched an all-time high in the past quarter.

"We have requested banks to consider requests based on local certificates so that restructuring of the farm loans can be undertaken," he said at the sidelines of an event here.
The issue was discussed at the State-level banking committee meeting held earlier this week, which was also attended by Maharashtra Chief Secretary, Muhnot said.
Over 1,200 of BoM's 1,800 branches are in the state. In the past fortnight, unusual hailstorms and heavy rains across 15 districts have led to the the loss of over two dozen lives and large-scale damage to winter crops.

Government officials said over 13.70 lakh hectares of crops have been destroyed, while some estimates peg the damage at Rs 5,000 crore.

Asked about impact of the damage on his bank, Muhnot said the bottomline will not take a hit immediately. "When there is loan restructuring, that is not treated as NPA. That is why there is no need for any further provisioning."
Muhnot, whose bank is the lead lender for Maharashtra, was however unable to provide any number on the quantum of restructuring of loans which will be needed to be done as a result of the nature's fury.
The bank scrip closed 2.80 per cent down at Rs 31.20 apiece on the BSE, whose benchmark index gained 0.16 per cent.

Muhnot said banks are on course to achieve the Rs 1- lakh crore disbursal target for priority sector lending for FY14. Last fiscal, the target was Rs 72,000 crore.