Network, business improve for banks in Maharashtra
Branches as well as businesses of banks operating in Maharashtra have increased in 2017-18 as the state is set to become the first trillion rupee economy in the country:
Branches as well as businesses of banks operating in Maharashtra have increased in 2017-18 as the state is set to become the first trillion-rupee economy in the country
As there has been a paradigm shift in Maharashtra’s financial attractiveness in recent times, banks operating in the state are sprucing their networks to garner more business from the trillions of rupees of committed investments.
BUSINESS: PSBS FAR AHEAD
The total business done by all the bank branches put together in the state is `37.29 trillion as of 31 December 2017, out of which PSU banks’ business stood at `24.81 trillion and private banks at `11.17 trillion, according to the latest data from Maharashtra SLBC, updated till Q3 of the current FY. While banks in Maharashtra had collective business of `35.78 trillion at the end of FY2016-17, banks’ combined loans stood at `17.79 trillion and deposits at `17.98 trillion.
Banks in the state are likely to see sizable opportunities for credit growth in all sectors in the months to come as 4106 MoUs worth over `12.10 trillion have been signed during the ‘Magnetic Maharashtra: Convergence 2018’, held in Mumbai recently. Of these, 3516 MoUs are in industries, 113 in skill development, 12 in higher education and 8 in IT, with expected generation of 36 lakh jobs.
Maharashtra chief minister Devendra Fadnavis had said: “The industry sectors - manufacturing, futuristic sectors like hyperloop, electric vehicles, logistics, textiles, gems and jewelry - account for `5.48 trillon of `12 trillion projected investment, followed by housing at `3.85 trillion and energy at `1.60 trillion. The state has also received investment intentions of `57 billion in the information technology sector and `24.4 billion in higher education. It will also get `10 billion Maharashtra Defence & Aerospace Fund to promote investment in defence and aerospace because many players have expressed interests in investment in this sector.”
REGIONAL NETWORK & GROWTH
There are total of 15,475 bank branches in Maharashtra as of December 2017. Of these, 8908 are PSU bank branches, 2092 private bank branches, 3731 branches of cooperative banks, 735 branches of 2 RRBs and 9 branches of Subhadra Local Area Bank. The state has a fairly distributed bank branch network across various regions, towns and villages. It is expected that industrially backward areas of the state will witness many business activities and as such there could be more banking activities, as indicated by the number of MoUs at the Magnetic Maharashtra conference.
Fadnavis said the state is getting investments across sectors in industrially backward tier 3 places like Nandurbar, Nanded and Parbhani in Marathwada, as well as Wardha in Vidarbha, and small towns such as Palghar, Bhiwandi, Aurangabad and Nagpur among others. While Marathwada stands to gain the most, investments will give a major facelift to the backward regions of Vidarbha, parts of north and western Maharashtra and Konkan, he said adding, what has really changed is the ability to engage investors to look beyond the golden triangle of Mumbai, Pune and Nashik.
BUSINESS IN SELECT DISTRICTS
Nandurbar has 77 bank brances - 37 rural, 28 semi-urban and 12 urban. Banks here could lend `17.62 billion out of the deposits of `34, 83 billion as of Q3, 2017-18. It has a
low CD ratio of 50.58, which should improve with new business. Fadnavis says the tribal district attracted investments worth `700 crore from Genus Paper and Boards. Lloyd Metal and Energy has agreed to invest `700 crore in the Maoist violence-affected district of Gadchiroli, he added.
Nanded district has 295 branches of all banks present, out of which 132 are in rural, 74 in semi-urban, 87 in urban and 2 in metro areas. They have a total business of `221.21 billion as of Q3, 2017-18, with a CD ratio of 82.53. The banks’ credit stood at `100.02 billion.
With new projects coming in, these banks in the district can look forward to new business opportunities. Fadnavis said n Nanded, India Agro Anaj has invested `200 crore. In Hingoli, `125 crore would be invested by Shiur Agro.
It is expected that the Indian Railways will establish a coach factory at Latur, which may change the landscape of the entire Marathwada region. According to Fadnavis, the metro coaches built here will be exported globally. The project, with an investment of `600 crore, will help Beed, Latur and Osmanabad districts too. It will also create whole gamut of ancillary industries as well.
Wardha district in Vidarbha has all the scope to increase its low CD ratio of 59.25. Fadnavis had disclosed that MoU for setting up a `2.17 billion common facilitation centre in Vidarbha for aerospace and defence sector has been signed with Tata Technologies.
With new projects coming up, banks present in Palghar can look forward to fresh business opportunities. Chhatrapati Shivaji Industrial City at Palghar received `120 billion investment and can create employment for 65,000, according to Fadnavis. Similarly Thrust Aircraft Cluster- MIDC MoU worth `350 billion with 157 acres of land in Palghar will create 10,000 jobs.
South Korean company Hyosung, the largest global spandex producer, has agreed to develop a textile township spread in 100 acres land near Shendra in Aurangabad in collaboration with Maharashtra Industrial Development Corporation. Bank branches of banks operating here can gain from this project. This would be the first FDI project in the Delhi-Mumbai Industrial Corridor with an investment of about `30 billion.
Banks have a good chance of increasing lending in Nagpur. Anand Mahindra, chairman of Mahindra Group, has announced during the summit that Tech Mahindra will invest `125 crore to create an all-green Tech Hub in Nagpur. The hub is expected to create at least 2500 jobs. Chief minister Fadnavis had said the state government’s energy department and Giriraj Renewables had signed an MoU for a solar panel project worth `2100 crore investment. The Maharashtra State Power Generation Company too has signed an MoU for an investment of `5200 crore in 800 MW thermal power project in Umred tehsil of Nagpur district. DeviCity Logistic Park will come up in Nagpur with an investment of `424 crore.
CREDIT, RECOVERY TO BE UP
Deliberations at the SLBC indicate that banking business in the state has been getting a fresh impetus and the scenario will further improve during the current FY. A.C. Rout, ED at Bank of Maharashtra agreed during the discussions at 137th SLBC meeting held in December 2017 that the performance of the state during the first half year of 2017-18 was low However, he is hopeful that despite initial hiccups in disbursements, once the implementation was over, routine cycle of fresh disbursements, recovery, re-scheduling, etc, would pick up in the coming months.