‘Corporate lending looks promising’
MUMBAI: Bank of Baroda’s (BOB) newly appointed chief executive Sanjiv Chadha is looking to put greater focus on lending to corporates and wants to fill the space vacated by some private and even public sector banks in pursuit of retail credit. In an interview on Monday, Chadha said that while he wants to capitalize on the opportunities in corporate lending, he also intends to improve the risk management capabilities of the bank. Edited excerpts:
A week into your tenure as the head of BOB, what are your priorities?
BOB is was among the first banks identified for the merger process and has made a fair bit of progress. As the merger plays out, the bank will be well-positioned. It will have a larger scale and also a lot of investments that have been made over the last few years under EX-CEO P.S. Jayakumar’s leadership will start to play out, particularly in specific areas of supply chain financing which is getting a lot of traction.
What will be your area of focus in terms of credit growth?
When it comes to corporate lending space, there is a lot of space that is getting vacated because banks seem to believe that retail banking is the only place to be in. I would believe there are opportunities in the corporate banking space and with the number of players becoming fewer, whoever remains will have more pricing power than in the past. Also, one of the investments made by the bank was with regard to working with fintech companies and NBFCS and these are also areas where we see a lot of opportunities. We have worked with NBFCS as passive lenders and now, there is an opportunity to work in a much more active manner.
What kind of an opportunity do corporate loans provide at the moment?
Large private sector banks have put on record their disinclination to get into certain parts of the corporate lending space. There would also be a large number of public sector banks who would be embarking on their journey towards merger. Then there are large NBFCS, very competitive in this space, are also constrained in terms of funds. So, as I was saying, there is not only space but also a requirement for a bank like BOB to play a more significant role. My focus will be on building the ability and the competencies to fund corporates and to build the risk-management abilities to make sure it is done in a sustainable manner.
Do you see signs of stress in the retail sector, especially in the unsecured portfolio?
I see no secular trend which suggests that there is stress building up. Whenever there is a slowdown, there would be implications. But there is broad consensus that growth should pick up again. For an economy like India, if you are a serious long-term player, you cannot be dependent upon any single engine of growth. You can always trim your savings. You need to have multiple engines firing to grow sustainably. For BOB, both retail and corporate are equally important.