Bank of India's Rs 70,000 Cr Loan Pipeline Driving Credit Expansion

Bank of India is poised to boost its credit expansion in the second half of the fiscal year with a robust loan pipeline totaling Rs 70,000 crore. Corporate loans, accounting for Rs 50,000 crore, are in various approval stages and expected to be disbursed in the coming months, according to the bank's top official.

Rajneesh Karnatak, Managing Director and CEO of Bank of India, shared details during an earnings call, stating, "We have our credit pipeline of nearly Rs 70,000 crore, out of which around Rs 14,000 crore is the RAM pipeline, which is Retail, Agriculture and MSME (Micro, Small and Medium Enterprise). We have a certain pipeline in the international book also and the remaining is the corporate credit pipeline, which is around Rs 50,000 crore."

The pipeline includes sanctioned loans, where documentation is either executed or pending and proposals, where the bank has granted in-principle approvals, with proposals at various stages of sanction.

This robust loan pipeline is expected to contribute to the public sector lender achieving a credit growth rate of 11-12 per cent in the current financial year. Karnatak expressed confidence, stating, "We are confident that we will achieve the credit growth guidance of 11 to 12 per cent."

The bank's domestic advances increased by 9.80 per cent from Rs 4.12 trillion in September 2022 to Rs 4.53 trillion in September 2023.

Bank of India anticipates a strong recovery from bad loans in the second half of the financial year, exploring options such as selling stressed assets to Asset Reconstruction Companies (ARCs), launching settlement schemes and approaching the National Company Law Tribunal (NCLT) to boost recovery.

"We are trying to do some transactions through ARCs. If it makes any sense to us where the sacrifice is low through the sale, definitely we will sell those assets to ARC," said Karnatak. He added, "NCLT is another option which is always there wherever the resolution under NCLT comes."

The bank has introduced four 'very aggressive' one-time settlement schemes for accounts that have already been written off. In the second quarter, the total recovery and upgradation of the bank amounted to Rs 1,638 crore. 

The bank successfully improved its asset quality during the second quarter, with Gross Non-Performing Assets (NPAs) decreasing to 5.84 per cent from 8.51 per cent in the same quarter of the previous financial year. In absolute terms, gross NPAs declined to Rs 31,719 crore as of 30 September 2023, from Rs 42,014 crore as of 30 September 2022.