With retail, agriculture and MSME (RAM) advances growing to 59 per cent of the total advances, Bank of Maharashtra now sees scope to nudge up corporate advances. According to AS Rajeev, MD and CEO, the bank’s board has given a broad direction that RAM advances should constitute 55 per cent of total advances, with corporate loans making up the rest. In an interview with BusinessLine , Rajeev, who has been at the helm of the Pune-headquartered public sector bank since December 2018, said a conscious decision has been taken to cut the average exposure to corporate advances from ₹500 to ₹600 crore earlier to ₹150-200 crore. The bank is also stepping up gold loan advances as the possibility of them turning sour is low. Excerpts:

The bank’s RAM portfolio is almost touching 60 per cent of the total advances. Is there scope to increase it further?

Our board’s direction is that RAM sector advances should be 55 per cent of total advanceswith the balance comprising corporate loans. Currently, corporate advances account for 41 per cent. So, this year, we are trying for 5 to 8 per cent (or around ₹5,000 to ₹6,000 crore) growth in corporate loans. We have existing relationships with well-established corporate groups across the country. We are extending loans to state-guaranteed projects and taking exposure to operating assets (road and power assets) via securitisation. We are restricting our per corporate exposure. Earlier, our bank had taken high exposure limits of ₹500 to ₹600 crore. Now, we have restricted this to ₹150 to ₹250 crore per corporate. However, in the case of government-guaranteed accounts, we are going up to ₹500 crore.

What is your outlook for loan growth?

As a whole, things will start improving. Sequentially, in Q1 (April-June) FY21, our retail loan book grew 6 per cent and MSME portfolio was up 7 per cent. If you extrapolate this growth, which happened despite the pandemic, MSME and retail growth rate in FY21 will be 28 to 30 per cent and around 25 per cent, respectively. Housing loan is the major driver of retail growth. This includes takeover of some of the accounts from some of the NBFCs as well as other banks.

Banks are looking to step up focus on gold loans. What is the bank’s strategy in this regard?

When I joined the bank, gold loan outstanding was only around ₹22 crore. But by June 2020our portfolio had already crossed ₹450 crore. By September, we want to reach ₹1,000 crore. Of the 1,850 branches, we have appointed appraisers in almost 1,300 branches. Infrastructure is in place in these branches. By March-end 2021, our portfolio will definitely reach ₹1,500 crore. There is no NPA in gold loans. Our interest rate is only 7.5 per cent. Moreover, the increase in loan to value (LTV) ratio from 75 per cent to 90 per cent, will provide adequate support to the borrowers. So, there is good potential for growth.

Where does the bank stand vis-a-vis loan moratorium?

In our case, loans under moratorium is around 24 per cent (or 1.55 lakh) of the total eligible accounts of 6.50 lakh. This covers around 23 per cent (or ₹16,500 crore) of the total eligible amount of ₹71,000 crore as of June-end 2020. As of March-end 2020, the amount under moratorium was ₹33,000 crore.

Segment-wise: Agriculture is at ₹2,000 crore; MSME ₹3,700 crore; retail ₹7,000 crore; large corporates around ₹2,900 crore; and others ₹1,000 crore as of June-end 2020. A number of borrowers have started servicing loans. So, my expectation is that the loans under moratorium may come down to 17 to 18 per cent by August-end.

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