State-owned Bank of Maharashtra is looking to raise Rs 4,000 crore during the next five years and 50 per cent of the fund is expected to come from the Centre.
“We have chalked out fund raising plan of Rs 4,000 crore over the next five years. While we will raise Rs 2,000 crore from the market, we are expecting the balance Rs 2,000 crore to come from the government,” bank chairman and managing director Sushil Muhnot said here over the weekend.
The bank’s capital adequacy ratio as of March 31 was at 11.94 per cent.
Bank of Maharashtra did not receive any money during the last round of recapitalisation by the government, worth around Rs 6,900 crore.
In the current budget, the government has allocated only Rs 7,940 crore for funding banks and there is no clarity whether BoM will get anything this time around or not.
The Finance Ministry of late has been encouraging banks to raise capital from the market.
Addressing an MSME summit here, Muhnot noted that the small scale sector has grown much faster than corporate sector in the last five years both in terms of credit growth as well as output growth.
“Due to various administrative and other issues the MSME sector is plagued with financial stress, leaving a good portion of the banks’ total credit exposure of Rs 8.50 trillion to the sector as bad loans,” he said.
They also have taken credit from non-banking finance companies to the tune of Rs 1 trillion, while the MSMEs total debt is a whopping Rs 13.64 trillion, he added.
Explaining the low penetration of bank loans to the sector, he said, though most banks want to lend maximum financial supports to MSMEs, most loan applications get rejected due to sketchy project report.
On new areas that the bank is looking at, he said, it is keen on renewable energy and refinancing of projects.