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IDBI focus on retail, small-unit lending

Mumbai, Sept. 30: IDBI Bank plans to raise its share of lending to retail, small and medium enterprises (SMEs) and agriculture to 50 per cent of its total advances within three years from around 35 per cent.

The state-run lender hopes to meet the target through branch expansion and an increase in the number of employees to serve a growing customer base.

In an interaction with The Telegraph, R.K. Bansal, executive director of IDBI Bank, said while loans to big corporate houses constituted the bulk of its advances, the plan was to raise the share of lending to consumers as well as the SME and agricultural sectors.

“As of now, the maximum exposure is towards large corporate houses. While the ratio in terms of outstanding loans stands at 65:35 (large companies to other sectors), it will be around 60:40 by the end of this year. Over the next three years, it will be around 50:50,” he said.

Bansal said the bank was increasing its network to meet this goal. It now has 980 branches and hopes to add another 150 this fiscal. The employee strength is projected to go up to 16,000 from 14,000.

“We may have a slight disadvantage of having less branches, which results in relatively lower CASA ratio — the proportion of current account and savings account deposits in total deposits — and higher cost of funds but we have an advantage on the overhead side. For instance, profitability and business per employee are the highest among all the PSU banks. In fact, our profit per employee is the highest compared with private banks,” he said.

Till the first quarter ended June, out of the total advances of Rs 1,67,779 crore, the infrastructure corporate group and the corporate banking group accounted for Rs 1,13,153 crore. Loans to micro, small and medium enterprises (MSMEs), agriculture and personal banking group constituted the rest.

Advances growth

According to Bansal, the bank expects growth in advances to be lower at around 13 per cent this fiscal from the earlier projection of 15 per cent because of the dull economic conditions. “This year, we had projected growth in advances at 15 per cent, but looking at the economy and likely projects, it may be less than 15 per cent, we feel it can be 12-13 per cent. Retail growth, however, will largely be driven by SME and agri lending,” he said.

Though banks are grappling with higher non-performing assets (NPAs) this fiscal owing to the economic slowdown, IDBI Bank is of the view that bad loans have peaked.

“Overall, both on the NPA and restructuring front, cases in terms of fresh additions are less in this quarter compared with the previous quarter.”

In the first quarter of this year, IDBI Bank’s gross NPAs jumped to Rs 5,496 crore from Rs 3,288 crore in the same period last year.

 
 
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