Decline in credit off-take was one of the concern areas for the banking industry in the past few quarters.

Karnataka Bank, which announced its third quarter results last week, was able to register a credit growth of 24.10 per cent during the third quarter (Q3) of this fiscal. The advances of the bank in the quarter stood at ₹44,411 crore (₹35,786 crore in the year-ago period).

Mahabaleshwara MS, Managing Director and Chief Executive Officer of the bank, told BusinessLine that bankers are seeing three challenges these days — growth, NPAs, and provisioning.

Terming credit growth as the main component in the growth challenge, he said, the 24.10 per cent credit growth is one of the best things that has happened to Karnataka Bank.

Stating that the bank focussed on credit to the retail and corporate sectors during the quarter, he said the bank went for top-rated clients in the corporate segment.

Corporate borrowers with ‘AAA’ and ‘AA’ ratings constituted 7.50 per cent and 7.72 per cent, respectively, of the gross bank credit. The balance outstanding for the corporate borrowers with ‘AAA’ and ‘AA’ ratings stood at ₹3,367 crore and ₹3,468.60 crore, respectively, during the period.

With these credit ratings, the bank had the advantage of reduced risk weights.

For retail and mid-corporates, the bank followed its due-diligence process and all other related things.

The credit growth also helped the bank to increase its credit-deposit (CD) ratio during the quarter. The CD ratio of the bank increased to 76.87 per cent during the third quarter from 62.3 per cent in the corresponding period of the previous fiscal.

Mahabaleshwara said this is the highest CD ratio for the bank in the last 17 years.

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