PSL, agri credit winners for Karnataka Bank
Karnataka Bank, while focusing on the retail sector, is giving priority to home loans
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.
TIGHT RETAIL APPRAISAL
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.
HOME LOANS UP
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.