Retail growth at PSB
Punjab & Sind Bank has launched new schemes and is aming for growth across various sectors and geographies
Punjab & Sind Bank has launched new schemes and is aming for growth across various sectors and geographies:
Punjab & Sind Bank has extended total advance of `12,165 crore through 28,010 loan accounts as of Q2 2017, which represents a 8.37% growth yoy. The share of corporate loans (53.60%) is the highest in the total loans of the bank, followed by SME (17.54%), agri (16.12%) and retail (12.74%).
Says Fareed Ahmed, ED of the bank: “We are confident of achieving all regulatory targets by December 2017.”
Housing loans lead in the segment wise yoy growth of retail loans with 11.71% share (`4914 crore). This is followed by auto loans with 9.9% (`1214 crore), mortgage loans with 5.25% (`6882 crore) and education loans with 2.78% (`275 crore) as on Q2, 2017-18. The retail loan portfolio of the bank has grown sustainably during 201718, compared to the previous year and under the gender based retail loan portfolio, the share of female category has increased by 10% over the last year. Further, the bank’s priority sector portfolio has increased by around 5% over the last year.
Punjab & Sing Bank has been focusing on improving the efficiency of loan processing. It operates specialized retail lending branches at different locations to improve the quality of processing and reduce TAT. Says Ahmed: “Our focus is on TAT, without compromising on the quality of appraisal. Most application forms for loans, particularly retail loans, have been made available on our website. We intend to make the processes more user-friendly, based on customer feedback.”
The bank has been ensuring that there are suitable tie-ups with each and every residential project financed by the bank. Ahmed says the bank has introduced a scheme for payment of business facilitation charges to builders and vehicle dealers for sourcing housing loan and vehicle loan proposals. Further, the scheme is also extended to ex-employees of the bank who help source these loans.
The bank is still short of its retail loan targets by 6% in 2017-18. Shortfalls in targets were observed under the zones having maximum number of metro and urban branches. Ahmed is confident that with concerted efforts and initiatives at all levels and with the aid of special credit campaigns, attractive offerings under Festival Bonanza Scheme, marketing, promotion activities and media campaigns, credit offtake under retail will improve during the next quarters of the current FY. Says he: “At present, retail advances constitute around 13% of our total advances; however, we are now focusing on a complete transformation from being a wholesale bank to being a retail bank.”
INCREASE IN HOME LOANS
The home loan segment is the major growth contributor for the bank under the retail loans portfolio. It accounts for 36% of the total retail loan portfolio as on 30 September 2017. Home loans also grew by 12% yoy. The share of home loans in retail loans has also been growing during the last 5 years for the bank: “The share has increased from 31% in March 2014 to 36% in September 2017 - from `2974 crore to `4914 crore. We have also seen a constant improvement in our priority sector home loan portfolio over the last 5 years,” says Ahmed.
He feels that with the introduction of enactments like RERA and Benami Transactions Act, there will be more transparency and integrity, which will enable the home buyers to buy properties of their choice at affordable prices. The bank is geared to exploit this opportunity, he says.
The home loan portfolio has also grown in 2017-18 - 12% increase over the last year. Ahmed maintains that each and every zone has shown a positive growth in this portfolio and under the gender based home loan portfolio, the share of female category has increased by 11% over the last year. The priority sector portfolio too increased by approximately 6%. He says the bank is strictly following the steps suggested by the central government to provide thrust and encouragement to the affordable housing segment.
Punjab & Sind Bank has been putting efforts towards growing its business. During 201718, it has introduced several new schemes aimed at giving a greater push to retail both deposits and advances - through CASA campaigns, Festival Bonanza Schemes, combo loan offers for vehicles and housing as well as new retail products. It has also introduced third party products. “One such approach, which is expected to yield great results, is our push for selling of products as a package, ie, inclusion of ADC
(Alternate Delivery Channel) products along with traditional products. We have entered into corporate agency tie-up for insurance business with LIC and SBI Life Insurance Company. As marketing alone is not sufficient, we are complementing the same with full focus on customer service and grievance redressal,” says Ahmed.
The bank has introduced 3 different schemes in 2017-18 to give a further boost to the retail segment. These are PSB SME Liquid Plus Scheme, PSB Vyapar Loan Scheme and PSB Mortgage Loan Scheme under which the bank has collectively given advances to the tune of `270 crore till the second quarter, says Ahmed.
Every field staff in the bank is expected to be a marketing person. Ahmed says in order to give the requisite boost to business activities, the bank has formed teams of officers to focus on MSMEs, retail and forex businesses at identified centers. It is making use of print media, hoardings, banners, etc in order to get deeper penetration in the market. Ahmed mentions that the bank would soon have its own presence in the social media platforms like Facebook even as it is making maximum use of SMS facility to reach out to customers.
The default rate in retail loans and housing loans as of Q2, 2017-18 is about 10% and 6% respectively. “The yoy default rate for retail loans has increased by 1.58%, owing to the current market scenario. The retail loan portfolio is being closely monitored to arrest fresh slippages, says Ahmed”
Being a north-based, the bank’s loan portfolio is geographically concentrated in Punjab and Delhi. The incremental retail target for FY 2018 is around `4000 crore, says Ahmed, maintaining it is now a constant endeavor to expand the portfolio across all geographies / sectors uniformly.
Fareed Ahmed admits there is increase in defaults in retail and home loans, mainly because of the market scenario