Mumbai: Bank of Maharashtra expects to clock 22% expansion in credit in FY11 and does not expect to meet the provisioning criteria set by the central bank by end-September, a top official said on Tuesday.
The state-run lender, whose provisioning coverage ratio, which indicates the extent of funds a bank has kept aside to cover loan losses, was at 54.7% as of June, and will fall short of the central bank’s 70% by end September, executive director M G Sanghvi told reporters.
Bank of Maharashtra hopes to cut its gross non-performing assets (NPA) ratio to 2.75% by March from 3.46% now, and bring down net NPAs to 1.7% by March from 2.02%, he added.
“We will use a multi-pronged approach to cut NPAs by credit expansion and aggressive recovery process and extra provisioning out of profits.” The bank, which has a sizeable exposure to rural and agricultural sectors, was impacted after the Indian government waived off farm loans.
The government, in the 2008-09 budget, announced a Rs71,000 crore debt waiver scheme and in the last budget extended the repayment period from 31 December 2009 to 30 June 2010.
The bank has not yet taken a call on revising its lending rates but may revise deposit rates in a fortnight, Sanghvi said.
“There is some pressure to raise deposit rates, we will take a call in a fortnight,” Sanghvi said.
On Monday, country’s largest lender State Bank of India raised lending and deposit rates keeping in line with the tightening monetary policy by RBI.
The bank has forwarded an application to the government for a total capital infusion of Rs1,800 crore till March 2013, said Sanghvi, adding that the government is expected to process the application in December or January.
It hopes to get a second tranche of capital infusion by the federal government by end of financial year 2010-11 after a first tranche of Rs588 crore in July, he added.
The lender would increase its exposure to the infrastructure sector and is targeting to raise it 18% of the loan portfolio from 16% at present, Sanghvi added.
It has gross advances worth Rs42,135 croere as of June end.
Shares in the firm ended 4.47% higher in a Mumbai market that closed flat.