Karnataka Bank Ltd (KBL) has said that its strategy to ‘conserve, consolidate and emerge stronger’ has done wonders during the Covid pandemic-driven crisis.

In a letter to the shareholders, Mahabaleshwara MS, Managing Director and Chief Executive Officer of KBL, said the resilience of KBL was well exhibited during the pandemic-driven crisis. The Covid-19 business prescription of KBL -- ‘conserve, consolidate and emerge stronger’ -- has done wonders, he said, adding the bank has been able to contain the expenditure significantly, improve the operational efficiency, realign the credit portfolio by focusing on retail and mid-corporates so as to ensue sustainability, and develop cost-lite deposit portfolio with CASA share of more than 31 per cent, etc.

The digital transactions of the bank stood at an all- time high exceeding 90 per cent. “Now, in terms of our digital capability, we are almost on par with any new generation banks,” he said.

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On the advances portfolio realignment strategy, he said the bank has been eyeing to have its credit exposure of minimum of 50 per cent to retail, 35 per cent to mid-corporates and not more than 15 per cent to large corporates so as to minimise the concentration on large corporate borrowers and to ensure continued sustainability.

The bank has been moving towards this direction in a sustainable manner due to the continuous efforts made by it. The yield on the retail and mid-corporate advances has been better than the large corporates, and the risk is wide-spread across the portfolio than that of concentration in the case of large corporate exposure, he said.

Aatma Nirbhar Bharat Abhiyan

Stating that the bank actively participated in the stimulus schemes of the government under the Aatma Nirbhar Bharat Abhiyan, he said it acted swiftly in extending the moratorium benefits, sanctioning of guaranteed emergency credit line loans to the needy and eligible borrowers and also acted quickly on MSME restructuring exercise etc., in a war footing way.

Referring to the Supreme Court order which said that there shall not be any charge of interest on interest / compound interest / penal interest for the period during the moratorium (from March 1 2020 to August 31 2020) on the loans from any of the borrowers even above ₹2 crore, he said the bank had already made ex-gratia payment of difference between compound interest and simple interest for the above six months to the borrowers in specified loan accounts as per the communications received from the Government of India dated October 23 2020 and the RBI Circular dated October 26 2020.

“In the case of remaining accounts, compound interest / penal interest on interest charged on the borrower accounts may have to be refunded and adjusted towards next instalment due within a reasonable time from the date of Supreme Court order dated March 23 2021. Further, with the vacation of Stay Order, NPA marking has also resumed,” he said.

FY 2021-22

For 2021-22, the bank is planning to grow its business at a moderate 12 per cent to take the total business turnover to around ₹1,42,500 crore. With a healthy business growth, ’cost-lite’ liability portfolio, strengthened fundamentals etc., the year 2021-22 should be an ‘Year of Excellence’ for Karnataka Bank, he added.