The Hindu Business Line : Bank of Maharashtra sets Rs 300-cr recovery target

Fiscal plans
Intends bringing down NPA ratio down to 1 per cent
Aims at Rs 55,000-crore business volume
Scope for raising Tier-II capital for Rs 350 crore

THE CHAIRMAN and Managing Director of Bank of Maharashtra, Mr M.D. Mallya (right), and the Executive Director, Mr Rajiv Madhok, in Bangalore on Saturday. V._Sreenivasa Murthy

Bangalore , Dec. 16

The public sector Bank of Maharashtra (BoM) has set a recovery target of Rs 300 crore for this financial year and has effected cash recovery of Rs 119 crore.

The Chairman and Managing Director, Mr M.D. Mallya, told presspersons here on Saturday, "We intend bringing down our non performing asset ratio down to 1 per cent by the end of this financial year."

The bank has crossed the Rs 50,000-crore business target as on December 8. It has achieved a business volume of Rs 50,454 crore.

Deposits comprised Rs 29,839 crore and gross advances amounted to Rs 20,615 crore, he said. It is targeting a business volume of Rs 55,000 crore by the fiscal year-end.

To raise CASA

Mr Mallya said focus of the bank would be to raise low-cost resources.

The low-cost resources comprising CASA (Current and Savings Accounts) comprised 43 per cent of the bank's working funds. Itintends to raise CASA to 45 per cent this financial year.

The focus on CASA, he said, had helped to bring down the weighted average cost of funds to 4.99 per cent during the first half of this financial year, from 5.2 per cent during the corresponding period of the last financial year. During the same period, the bank managed to raise the average yield on assets to 8.63 per cent, a 40 basis point increase.

Despite these trends, the net interest margin (NIM) was 2.7 per cent, below the industry average of above 3 per cent.

Mr Mallya said that this was due to the accounting policy for transfer of government securities from the available for sale category to the held to maturity.

Net interest margin

During the year, the bank has transferred about Rs 1,800-crore worth of securities taking advantage of the RBI's provisions allowing for such transfers once every year.

The losses booked on account of this transfer was netted from interest earnings, he said, leading to a lower NIM. If the bank had netted the amortisation amount from other income, the NIM would have been 3.3 per cent within the industry average.

The amount amortised for this transfer during H1 was Rs 54 crore.

Another Rs 54 crore would be netted from interest earnings in H2 as well, he added.

The bank added 50 branches to its 1,321 branch network in the country. It has room for raising tier two capital for another Rs 350 crore.

But Mr Mallya said the raising of capital would be done in tandem with asset growth, since it had a capital to risk weighted asset ratio of over 12 per cent.

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