Bank of In­dia rides ahead on re­tail loans

Bank of In­dia is now con­cen­trat­ing on home loans, while its ve­hi­cle loans port­fo­lio is grow­ing too:

Banking Frontiers - - Loan Disbursals - Me­hul@bank­ingfron­tiers.com

Bank of In­dia has turned around and posted yoy net profit of `88 crore in Q1 2017-18 against a net loss of `741 crore a year ago. Though its gross ad­vances grew by just 0.90% yoy, its re­tail loans in­creased by 13% yoy stand­ing at `42,802 crore as on 30 June 2017. The share of re­tail loans in to­tal do­mes­tic ad­vances has in­creased from 13.80% in June 2016 to 15.20% in June 2017, though this port­fo­lio lagged the share of cor­po­rate and other loans (50.13%), MSME (17.86%) and agri­cul­ture (16.81%) in Q1, 2017-18. Pri­or­ity sec­tor ad­vances (41.20%) and agri­cul­ture ad­vances (19.77%) too were above the reg­u­la­tory stip­u­la­tion. Gross ad­vances, at `391,062 crore, grew by 0.90% yoy.

Din­a­bandhu Mo­ha­p­a­tra, MD & CEO at the bank, says within the re­tail port­fo­lio, ve­hi­cle loans showed the max­i­mum (27.22%, `3655 crore out­stand­ing) yoy growth, fol­lowed by loans against prop­erty (19.93%) and home loans (15.28%). He said the bank has de­vel­oped a Lead Man­age­ment Sys­tem (LMS) wherein any prospec­tive cus­tomer can ap­ply for re­tail loans and the sys­tem is is be­ing mon­i­tored on a day to day ba­sis at var­i­ous lev­els.

GEN­DER WISE BOR­ROW­ERS

The to­tal num­ber of re­tail ac­counts in the bank reached 753,006 as of Q1 2017-18. The sum to­tal of pri­or­ity and non-pri­or­ity sec­tor re­tail loans have been in­creas­ing con­sis­tently - from `17,782 crore in 201213 to `38,160 crore in 2016-17. Says Mo­ha­p­a­tra: “While male re­tail bor­row­ers in­creased from 13,711 in 2012-13 to 28,112 in Q1 2017-18, fe­male re­tail bor­row­ers are up from 3558 in 2012-13 to 7281 in Q1,2017-18.”

HOME LOAN GROWTH

Un­der the re­tail loan seg­ment, the bank has con­cen­trated on home loans in the last 5 years. Home loan out­stand­ing has in­creased to `23,212 crore in Q1 2017-18 from `22,248 crore as of 31 March 2017, regis­ter­ing 15.28% growth. Growth has been hap­pen­ing across all the zones, gen­der and pri­or­ity sec­tors over the past 5 years. Mo­ha­p­a­tra says while male cus­tomers dou­bled from 8227 in 2012-13 to 16548 in Q1 2017-18, fe­male cus­tomers have more than dou­bled from 1889 in 2012-13 to 4090 in Q1,2017-18.

AF­FORD­ABLE HOUS­ING

The num­ber of ac­counts un­der af­ford­able hous­ing has in­creased to 74,964 in Q1, 2017-18 from 66,512 a year ago. The cor­re­spond­ing loan out­stand­ing amount has in­creased to `500 crore, regis­ter­ing yoy growth of 18.48%.

The bank has im­ple­mented the Prime Min­is­ter’s Awas Yo­jana for low in­come group, eco­nom­i­cally weaker sec­tion and mid­dle in­come group. Mo­ha­p­a­tra ex­plains: “We are lay­ing special em­pha­sis on pro­mo­tion of af­ford­able hous­ing all across In­dia by ed­u­cat­ing cus­tomers vig­or­ously. We have been try­ing to ed­u­cate and pop­u­lar­ize such schemes at the ground level all across our zones.”

MAR­KET­ING

The bank has been or­ga­niz­ing var­i­ous cam­paigns in all its zones on a month on month ba­sis. It has been ag­gres­sively ad­ver­tis­ing its re­tail prod­ucts through hoard­ings, elec­tronic and print media. The bank is also reach­ing out to cus­tomers through var­i­ous events and cam­paigns on a reg­u­lar ba­sis to cross sell var­i­ous prod­ucts.”

EX­PO­SURE & NPA

Home loans ac­count for the high­est ex­po­sure among the bank’s re­tail port­fo­lio as of Q1 -2017. It in­creased by `3077 crore from `20135 crore and its NPAs are up by `294 crore to `826 crore. It is fol­lowed by loan against prop­erty, whose ex­po­sure and NPAs are up by `1023 crore and `83 crore re­spec­tively. Sur­pris­ingly, ed­u­ca­tion loan NPAs are also up by `80 crore from `190 crore a year ago. Mo­ha­p­a­tra ex­plains: “For re­tail loans, we are car­ry­ing out proper due dili­gence ex­er­cise along with ad­e­quate KYC to have a proper con­trol and risk pro­fil­ing sys­tem in place.”

SOFT­WARE FOR NPA

The bank has been con­tin­u­ously up­grad­ing its in­ter­nal sys­tems and pro­ce­dures to con­tain NPAs and slip­pages. For re­tail loans, strin­gent mea­sures are adopted bank-wide in­clud­ing sys­tem check and con­trols with proper credit mon­i­tor­ing both pre and post dis­burse­ment. Mo­ha­p­a­tra says an in­house dash­board de­vel­oped by the bank’s IT team gen­er­ates, an­a­lyzes data on reg­u­lar ba­sis.

TAR­GETS

The bank’s tar­get for re­tail loans for the cur­rent FY is `50,194 crore and for home loans `27,308 crore. Mo­ha­p­a­tra says the bank is fo­cus­ing on in­creas­ing its home loan port­fo­lio across var­i­ous ge­o­graph­i­cal sec­tors spread pan In­dia in­clud­ing ur­ban/ semi-ur­ban and ru­ral ar­eas.

Din­a­bandhu Mo­ha­p­a­tra wishes to in­crease loans to pro­fes­sion­als & self-em­ployed by ap­prox­i­mately 8% over 2-3 years down the line

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