Bank of Maharashtra is planning a foot march by opening one branch each in 320 districts across the country, where it no longer has a presence, till the next financial year.
In this financial year, 135 such districts are to be included and the remainder are as part of the Hub and Spoke model to include branch and banking correspondents in 2021-22. This approach, a senior executive said, would help the state-owned bank, which is reportedly being considered for privatization, entering new geographic areas.
“We are moving forward with the expansion,” said AS Rajeev, MD and CEO. Out of 150 new branches of this fiscal scheme, 120 have been opened, out of which many districts do not have bank presence. By March, the target will be exceeded and the BOM will close the year with 2,000 branches, against 1,850 in April 2020.
On the possibility of privatization of the bank, he said that ‘it seems that no decision has been taken on the banks to be privatized’. “My feeling is, it is yet to be finalized,” he said.
In view of the comfortable capital adequacy ratio – 13.76% and expected to cross 14% in this financial year – Bank of Maharashtra has already conveyed to the Center that no further capital is required for this. “We will be able to grow at the same rate without capital for one to one and a half years,” he said, adding that the bank could go to the market in the next financial year to raise funds through a follow-on public issue. Or a QIP.
The board has already approved raising ₹ 3,000 crore, out of which 1,000 1,000 crore will be equtiy and t 2,000 crore, through Tier I and II bonds. “We have already raised 450 crore Tier II bonds. We will go for Tier I bonds when needed, ”he said.
On the increase, Mr. Rajiv said that the bank benefited from the decision to focus more on the RAM (retail, agriculture and MSME) sectors. The ratio between the corporate and RAM business segments had changed from 50:50 to 61:39 in the last two years. In addition, Bank of Maharashtra was also seeing an increase in CASA, he said.
Noting that the quality of assets in RAM was also good, he said that large corporates also prefer bond markets. On non-performing assets, he said the bank had a net NPA ratio of 2.59% which was the best in the industry, while gross NPA was around 7%. By March, they expect improvement below 2% and 7% respectively.
Asked about the outlook for the coming financial year, he said that GDP is expected to strengthen as well as GDP, leading to higher growth rate. This will be a good year for bankers.
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