In an attempt to spread its risks better, public sector lender Bank of Baroda (BoB) is rebalancing its credit portfolio and widening its focus on retail and SME segments, a senior bank official said.
The bank has brought down its dependence on credit to large corporates from 39.19% of its total advances in the April-June quarter of FY14 to 31.9% in the December quarter. At the end of the December quarter, Bank of Baroda’s total advances stood at R3.52 lakh crore, an increase of 17% over the same period last year.
On the other hand it increased the share of credit to retail and SMEs from 17.33% and 21.35%, respectively, in Q1 of FY14 to 17.6% and 22.4% at the end of the December 31, 2013.
?There hasn’t been much loan growth in the corporate sector and that is why from the beginning of the year (FY14) we decided to shift the focus slightly towards the retail and SME segments,? the official said.
He added that BoB was basically a corporate bank and, so, to rebalance the portfolio to some extent, it was decreasing its dependence on corporate loans.
The bank has also been building capacity in the retail and SME segments for the last 4-5 years, which is now being utilised, he explained.
?In the last one year, not much capacity building has taken place; so, companies were focusing on their existing business. We have also been treading cautiously in lending to infrastructure sectors like power and roads,? he added. At the end of the December 2014 quarter, the bank’s gross NPA ratio of large and medium industries stood at 6.03%, the largest contributor after agriculture at 5.77%.
According to RBI data, non-food credit as on March 21, 2014 stood at R59,14,608 crore, up 14.53% from a year ago, and growth trended below the RBI projection of 15% credit growth.
Credit growth had hit a high of 18.20% y-o-y in the fortnight ended September 18. Credit demand had increased in August and September as the RBI had taken extraordinary liquidity tightening measures in July to stem the slide of the value of the rupee.
