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Corporation Bank will be agreeable to restructuring the loans of its microfinance institution (MFI) clients provided the latter first restructures the loans of their distressed small borrowers in Andhra Pradesh, according to the bank's Chairman and Managing Director, Mr Ramnath Pradeep.
Though its loans aggregating Rs 700 crore to MFIs have been serviced without any delay so far, the public sector bank will insist on ‘back-to-back' restructuring should MFIs default in the future.
“In case MFIs want their loans restructured in the future, we will also insist on personal guarantees by the promoters of these institutions,” said Mr Pradeep at the launch of the bank's mobile retail payment service ‘CorpMcash'.
The Corporation Bank chief said all banks should adopt a unified approach on the conditions to be imposed on MFIs for restructuring their loans under the corporate debt restructuring mechanism.
Business target
The Mangalore-headquartered bank is likely to set a target of growing its loan book by about 25 per cent and deposits by around 22 per cent.
“We received a capital infusion of Rs 300 crore from the Government recently. This infusion has pushed up our capital-adequacy ratio to around 15 per cent. Further, we have headroom of Rs 2,000 crore under Tier-II capital. This quantum of capital is sufficient to support the growth of our loan book in the current financial year,” said Mr Pradeep.
Mobile payment service
The bank has launched a mobile retail payment service which enables customers make payments at merchant establishments such as malls, grocery shops and chemists, said Mr B. R. Bhat, General Manager.
All that a Corporation Bank customer needs to do to activate the mobile payment service is download the ‘YPayCash' software on the mobile (with a standard camera) from its vendor eMudhra Consumer Services. What is unique about the bank's payment model is that instead of the normal fixed and wired point-of-sale (POS) terminal, the mobile (with a standard camera) with the merchant establishment (which is also the bank's customer) is enabled to function as a POS terminal.
Once a customer sends an SMS to the bank's server with the payment details, he will receive a unique barcode on his mobile. The operator of the POS-mobile at the merchant establishment then captures the barcode with the camera and the payment transaction gets completed.
“What we have launched today is a prepaid mobile wallet. At any point in time, the wallet can be electronically enabled to make payments up to Rs 5,000. We will not charge our customers. In the first year, we expect about 10 lakh customers to use this service,” said Mr Bhat.
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