BoM on course to expand, tap markets: A.S. Rajeev
No capital needed from Centre: MD
Bank of Maharashtra is pursuing plans to grow footprint by opening a branch each in 320 districts across the country, where it now has no presence, by next fiscal.
By this fiscal, 135 such districts are to be covered and the remaining, in 2021-22 as part of a hub-and-spoke model involving the branch and banking correspondents. This approach, said a senior executive, would help the State-owned bank, which is reportedly being considered for privatisation, foray into new geographies.
“We are going ahead with expansion,” MD and CEO A.S. Rajeev said. Of the 150 new branches planned this fiscal, 120 have been opened, with many in districts where the bank has no presence. By March, the target will be be exceeded and BoM will close the year with 2,000 branches as against about 1,850 in April 2020.
On likely privatisation of the bank, he said ‘it seemed no decision has been taken on the banks that will be privatised’. “My feeling is, it is yet to be finalised,” he said, adding these were policy decisions and the government as owner will decide.
In view of the comfortable capital adequacy ratio — 13.76% and expected to cross 14% by this fiscal — Bank of Maharashtra has already conveyed to the Centre that it does not require further capital infusion. “We will be able to grow without further capital for one to one-and-a-half years at the same rate,” he said, adding the bank may go to the market next fiscal, to raise funds via a follow-on public issue or a QIP.
The board has already approved raising of ₹3,000 crore, of which ₹1,000 crore would be via equtiy and ₹2,000 crore, through tier I and II bonds. “We have already raised ₹450 crore tier II bonds. We will go for Tier I bonds when required,” he said.
On growth, Mr. Rajeev said the bank benefitted from a decision to focus more on the RAM (retail, agriculture and MSME) sectors. The ratio between corporate and RAM business segments had changed from 50:50 to 61:39 over the last two years in favour of the latter. Besides this, Bank of Maharashtra was also seeing growth in CASA, he said.
Noting that asset quality in RAM was also good, he said large corporates also preferred to tap the bond markets. On non-performing assets, he said the bank’s net NPA ratio at 2.59% was one of the best in the industry, while gross NPA was almost 7%. By March, they are expected to further improve to 2% and below 7%, respectively.
To a query on the outlook for the coming fiscal, he said the growth in credit offtake was expected to be robust with the GDP also expected to log a higher rate of growth. It will be good year for bankers, he said.
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