Bank of Baroda (BoB) expects to develop above market levels in the next monetary year. In an interview, Vikramaditya Singh Khichi, executive director (ED), BoB, highlights the factors to Ankur Mishra for the bank’s stellar development in the household loan segment. Excerpts:
What has been your tactic for retail loans amid Covid-19? Is there a deliberate move to concentrate more on retail loans?
Though the pandemic brought challenging challenges, it also gave us the chance to make higher use of the digital mode to get leads and maintain our concentrate intact. The retail loan segment is an vital aspect of our development story and it figures prominently in our general tactic.
Do you think the momentum in retail loans will be maintained? What is your outlook on development in advances in the present monetary year and the next one (FY22)?
Yes, we are optimistic about continuing development in retail loans as the macro-financial indicators point at below penetration in this segment. For instance, in household loans, the penetration level is just 10%. At Bank of Baroda, the retail loan book is increasing at more than 13% on a year-on-year (y-o-y basis and in the household loan segment, by about 12% y-o-y, which are above market levels.
Growth is anticipated to be robust in the next monetary year, and we hope to continue increasing at above market levels. By when will the bank attain double-digit development in (general) advances?
The bank is undertaking effectively in different retail loan solutions, viz housing loan, auto loan (about 22% y-o-y development) and education loan (about 10% y-o-y development), and is also increasing larger than the market in general advances. We anticipate to retain the very same tempo in the future, even accelerate development additional.
How are you placed on disbursements and collections? Are these back to pre-Covid-19 levels?
We are just about at pre-Covid19 levels on disbursement and collection parameters.
You have accomplished double-digit development in the household loan segment. What tactic have you employed?
It is a outcome of superior solutions, pricing and processes, the hallmark of our bank. We have access to higher-high-quality borrowers via bureau scores and we are in a position to value our solutions really competitively. The repo price modifications created by the Reserve Bank of India (RBI) in the early aspect of the monetary year offered current household loan borrowers an solution to shift their household loans from non-banking monetary corporations (NBFCs)/housing finance corporations (HFCs). And this came as an chance for us to develop the household loan organization. The launch of new specialised mortgage retailers and item innovation also contributed to the development we have accomplished. The third quarter of this fiscal saw perceptible development in new household sales across the metro cities, thanks to superior presents from developers, some home value correction and interest prices becoming at an all-time low in the segment.
Do you feel there could be a develop-up of pressure in the retail book? To what levels do you anticipate retail NPAs to rise? How do you program to address the concern?
As we are currently at the pre-Covid-19 level, we do not foresee any key improve in pressure in the retail book. As I described earlier, we are focused on high-quality development. Around 73% of our borrowers have a bureau score above 725 and 84%, above 700. There is thus no trigger for undue concern as regards the pressure levels.
How are you placed on provisioning?
The bank has created sufficient provisions as of December 2020 (Q3 FY21), in conformity with regulatory recommendations as effectively as the Supreme Court (SC) order. The Provision Coverage Ratio (such as Two) was above 85% in Q3FY21. The bank is setting aside 20% for substandard category assets, as against the regulatory requirement of 15%. We make acceptable provisions anytime the circumstance warrants.
Any plans to raise more capital this fiscal, offered that you have currently raised more than `3,700 crore via tier-1 bonds?
The raising of capital depends on the bank’s needs and the marketplace situation. In FY2020-21, we have raised a small more than Rs 8,200 crore, which contains equity capital of Rs 4,500 crore via the qualitative institutional placement (QIP) route lately.