Bank of India's Plan for a Rs 70,000 Crore Loan Injection to Drive Credit Growth

27 Nov, 2023

Bank of India's Plan for a Rs 70,000 Crore Loan Injection to Drive Credit Growth

Bank of India is gearing up with a significant plan to boost its credit expansion by infusing a robust loan pipeline worth Rs 70,000 crore in the latter half of the ongoing fiscal year. A substantial chunk of this fund, amounting to Rs 50,000 crore, is dedicated to corporate loans that are presently undergoing different approval stages. The bank's top official revealed these insights, shedding light on the bank's strategic roadmap.

Rajneesh Karnatak, the managing director and CEO of Bank of India, provided detailed information during an earnings call, stating, "Our credit pipeline stands at nearly Rs 70,000 crore, comprising approximately Rs 14,000 crore dedicated to RAM (Retail, Agriculture, and MSME) initiatives."

Karnatak further elucidated, "This pipeline encompasses various segments, including international books, corporate credit, sanctioned loans, and proposals awaiting different stages of sanction, such as documentation and in-principle approvals."

This formidable loan pipeline is projected to bolster the public sector lender's efforts to achieve an impressive credit growth rate of 11-12% within the current financial year. Karnatak expressed confidence, affirming, "With the active phase ahead, particularly in the third quarter, we anticipate substantial growth in our credit numbers by the end of December."

The bank's domestic advances soared by 9.80% from Rs 4.12 trillion in September 2022 to Rs 4.53 trillion in September 2023, signifying a notable uptick in lending activities.

In a bid to fortify its position and recover from bad loans, Bank of India plans to explore various avenues, including selling stressed assets to Asset Reconstruction Companies (ARCs), initiating settlement schemes, and resorting to the National Company Law Tribunal (NCLT) when required.

Karnatak highlighted the bank's strategies, stating, "We are actively engaging with ARCs and considering NCLT resolutions wherever viable. We've also introduced aggressive one-time settlement schemes to address accounts previously written off."

During the second quarter, the bank witnessed a remarkable recovery of Rs 1,638 crore and an overall enhancement in asset quality, evident from the reduction of Gross Non-Performing Assets (NPAs) to 5.84% from 8.51% in the previous financial year's corresponding quarter. The gross NPAs declined from Rs 42,014 crore as of September 30, 2022, to Rs 31,719 crore as of September 30, 2023.