Karnataka Bank targets 15pc credit growth for 2021-22
Karnataka Bank Ltd (KBL) expects a credit growth of 15-17 per cent during the current fiscal.
Replying to a query by a shareholder on the sluggish credit growth during 202021 at the 97th annual general meeting of the bank on Thursday, Mahabaleshwara MS, Chief Executive Officer and Managing Director of the bank, said KBL utilised the pandemic-affected year 2020-21 for realignment of its credit portfolio.
He said the bank was slightly tilted towards large advances, and it realigned towards retail and mid-corporate advances during 2020-21 by having about 5.99 per cent credit growth under retail, and about 6 per cent in mid-corporate sector.
Terming retail and midcorporate as focus areas of the bank, he said the bank observed that delinquency is less in these segments, and it would also help the bank on improved yield on advances. Risk is also highly diversified.
Realignment of the portfolio was the reason for the sluggish credit growth during the 2020-21, Mahabaleshwara said.
"Now we have projected a credit growth of 15-17 per cent," he added. The 97th AGM also sought shareholder approval to borrow amounts not exceeding, in aggregate, ?6,000 crore over and above the aggregate of the paid-up capital of the bank, free reserves and the securities premium.
Terming it as an enabling resolution, Mahabaleshwara said this is a resolution to facilitate the ordinary course of banking business. As of March 31, the total borrowings of the bank was ?1,764.88 crore against the limit of ?2,000 crore as approved by shareholders in the 95th AGM held on August 7, 2019. This consists of subordinated tier2 debt instruments of ?970 crore raised for the purpose of augmenting capital funds, and refinance availed from eligible financial institutions.
"Although the bank has sufficient liquidity, and does not have borrowings in the immediate future, the bank may consider the refinance option as a competitive tool when interest rates are conducive.
"Here, I also wish to state that as on the date of this meeting, there is no proposal for raising capital via bonds. However, in case, if the bank wishes to explore various options, bonds or debentures route is also kept in mind, considering various financial management aspects," Mahabaleshwara said.