Bank of Baroda braces up to expand mid corporate loans

BoB step up on super app play, faces a tough competition

State-owned Bank of Baroda is taking the lead in loans for mid and small companies seeking credit up to Rs 100 crore. The lender has earmarked four clusters across the country where such loans, assessed within defined time limits, can be approved directly.

This would help it compete more efficiently with the nimble non-banking finance companies which, until now, dominate lending to that segment.

A centralised processing centre has been operating in Gujarat GIFT City, which in turn supports the technology behind the whole gamut of trade finance operations offered to those customers, who otherwise pay more to get bank services compared with large companies.

“We want to groom small & mid-corporates and help them to grow into large corporates,” said Subrat Kumar, chief general manager and head-mid corporate at Bank of Baroda. “If you stand firmly behind them once they graduate to the next level of growth, we can be a lifetime banker.”

“The aim is to build a broad relationship over the lifecycle of the company – from MSME to Mid-Corporate to a Large Corporate,” he said.

The move will help to reduce the turnaround time to just about two weeks. At the same time, a cluster approach keeps record of their businesses, which are instrumental in appraising their creditworthiness over a period of time.

The bank has also introduced a digital app where clients, including small, mid-sized & large corporates, can avail trade finance services digitally.

It has embarked on a dedicated loan expansion strategy ensuring quicker disbursal time for mid corporates with limited asset quality risk. Companies requiring funding up to Rs 250 crore are classified as mid corporates by the public sector lender.

Those clusters are spread across four zones including North, South, East and West. More than two dozen dedicated mid-corporate branches will work under the clusters that will serve borrowers and be the one stop solution for all their banking needs.

“This will yield dividends over a period of time, he said.

The bank is also ramping up human resources to pursue its objectives.

The recruitment of 325 relationship managers and credit analysts with specialised skillsets is under process, who will be dealing with the corporate clients.

“We are looking to grow our mid-corporate book in double digit this fiscal year and our number of borrowers are also likely to rise substantially” said Kumar.

Bank of Baroda’s corporate loan book grew more than 17 percent year on year in the June quarter Q1FY23.

“The capex cycle is turning up and interest rates are normalising which will provide further impetus to the segment,” said the chief general manager.

“In the backdrop we do not want to miss the bus and are aiming to increase our corporate loan book.”

The bank sees opportunities in the infrastructure segment including roads, warehouses and renewable energy. Besides, steel, cement, chemical and real estate businesses are also opening new opportunities to expand credit.

Source: Economic Times

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