PSL, agri credit win­ners for Kar­nataka Bank

Kar­nataka Bank, while fo­cus­ing on the re­tail sec­tor, is giv­ing pri­or­ity to home loans

Banking Frontiers - - Performance Parameters - Me­hul@bank­ingfron­

Kar­nataka Bank, has recorded en­vi­able growth in its credit port­fo­lio. The bank’s gross bank credit out­stand­ing as on 31 March 2017 was `37,585.24 crore cov­ered by 3,74,599 ac­counts. The re­tail seg­ment ac­counted for 52.59 of the credit, agri­cul­ture 18.38%, SME 13.01% and cor­po­rate 47.41%.

Says Murlid­har Kr­ishna Rao, GM, Credit, at the bank: “The ma­jor loan seg­ments and yoy growth as at the end of FY18 are `4346.51 crore (4.18%) un­der agri­cul­ture, `5944.51 crore (10.36%) un­der MSME, `216.89 crore (12.16%) un­der ed­u­ca­tion, `5153.59 crore (12.88%) un­der hous­ing, `4112.63 crore un­der oth­ers.”


Kar­nataka Bank has achieved 48.13% against tar­get of 40% of ad­justed net bank credit (ANBC) un­der PSL and its per­for­mance un­der agri­cul­ture sec­tor was 18.38% against the tar­get of 18% of ANBC. “How­ever, we were not able to achieve the tar­get set un­der MSE sec­tor and the yoy per­for­mance was 5.71% against the tar­get of 20%. This year we are con­fi­dent of show­ing good per­for­mance un­der all the sec­tors,” says Murlid­har Rao.

The bank has formed an ex­clu­sive Mar­ket­ing Sup­port Group (MSG) to con­cen­trate on aug­men­ta­tion of credit and there are 60 re­la­tion­ship man­agers who are posted at var­i­ous branches across In­dia. The group un­der­took ac­tiv­i­ties for credit aug­men­ta­tion without los­ing sight on qual­ity. Murlid­har Rao says an ag­gre­gate of 4474 loan ac­counts in­volv­ing an amount of `1571.11 crore was can­vassed by the RMs dur­ing the last fis­cal. The RMs are also main­tain­ing reg­u­lar con­tacts with branch heads and re­gional heads through SMS, video con­fer­enc­ing fa­cil­ity to en­hance the per­for­mance level.


Kar­nataka Bank has not been ex­pe­ri­enc­ing much stress in the re­tail port­fo­lio. The de­fault rate in 2016-17 was around 2.22% com­pared to 2.61% in 2015-16. It has a sep­a­rate credit mon­i­tor­ing depart­ment. Says Murlid­har Rao: “We have strength­ened our due dili­gence process and a proper screen­ing mech­a­nism has been put in place. We are rat­ing the ap­pli­cants be­fore tak­ing the ex­po­sure and credit fa­cil­i­ties are ap­praised as per the rat­ing. Credit in­for­ma­tion re­ports from credit in­for­ma­tion com­pa­nies are ob­tained to ver­ify the credit his­tory of the ap­pli­cants while pro­cess­ing credit pro­pos­als/ be­fore tak­ing a de­ci­sion. Also, the ap­pli­cants’ names are ver­i­fied in CFR of RBI.”

The de­fault rate in re­pay­ment of home loans has slightly de­creased dur­ing the last fis­cal - 1.70% from 2.35% dur­ing 2015-16. Rao says the due dili­gence process and the ef­fec­tive col­lec­tion mech­a­nism have helped and the stress is un­der con­trol.


Kar­nataka Bank has con­cen­trated more on re­tail port­fo­lio, par­tic­u­larly in the last 5 years. Un­der the re­tail loan seg­ment, the bank has given due thrust to home loans. It con­ducts reg­u­lar cam­paigns and these ef­forts have yielded the de­sired re­sults to the ex­tent that the ad­vance mix is al­most bal­anced. “The share of home loans in our re­tail seg­ment has been in­creas­ing in the last five years. This share has in­creased from 18.01% in 2012-13, to 20.22% in 201314, to 21.57% in 2014-15 and to 21.99% in 2015-16 to 22.75% in the last fi­nan­cial year,” says Murlid­har Rao.

Dur­ing the last 5 years, there was con­sid­er­able in­crease in the hous­ing loan sanc­tions. The to­tal out­stand­ing of home loans as on 31 March 2017 in re­spect of branches in north, south, east and west ar­eas are `251.28 crore, `3403.97 crore, `133.17 crore, `709.47 crore re­spec­tively.

The de­mand for hous­ing loans is on an in­crease in all the seg­ments - salaried, self­em­ployed and busi­ness class. Says Murlid­har Rao: “Home loans to self-em­ployed, salaried and busi­ness class cus­tomers of our bank stood at `3422.27 crore, `1062.51 crore and `13.12 crore re­spec­tively as of 31.03.2017.”

Kar­nataka Bank has set an am­bi­tious lend­ing tar­get un­der this sec­tor. “We in­tend to dis­burse `1800 crore con­sist­ing of around 7400 home loans and we are con­fi­dent of sur­pass­ing the tar­get well be­fore March 2018. We are also plan­ning to open 35 new branches, which will also help in achiev­ing the tar­gets,” says Murlid­har Rao.

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