The decision by State Bank of India to cut deposit rates on savings account below Rs 1 crore to 3.5% was very bold and other banks could follow them, RP Marathe, managing director and CEO of Bank of Maharashtra, said on Monday. Banks had never gone below 4% and some even offered up to 7% interest on savings accounts and it was for the first time that a bank has made such move. All banks want to reduce their cost and his bank too will be studying their customer profile and the impact of such a reduction on their business and take a call, Marathe said, adding that his bank would closely watch how other banks respond to this development.
For the first quarter of FY18, BoM reported a 3.72% Y-o-Y rise in net loss to Rs 412 crore. However, on a sequential basis, net loss declined by 9.49% from Rs 455 crore in Q4FY17, Marathe said. Slippages in Q1 were down Rs Rs 1,626 crore and there was a sharp decline in new NPAs, he said. The bank’s operating profit increased 11% Y-o-Y to Rs 533 crore, but increase in provisions led to the loss.BoM is working on recovering loans and has taken six cases to the NCLT, and this is putting pressure on defaulters and many are coming for OTS, Marathe said. There was a 200% increase in cash recovery to Rs 630 crore in Q1FY18.
Gross NPAs stood at Rs 18,049 crore, which was 18.59% of gross advances. Net NPA stood at Rs 11,259 crore, which was 12.48% of net advances. Advances reduced by Rs 6,000 crore to Rs 97,096 crore. The bank has put brakes on branch expansion and is not adding manpower. Operating costs have been reduced and the bank is reducing dependence on corporate advances and shifting focus to retail advances, Marathe said. The share of retail advances have gone up to 54%. The cost of deposits for BoM was 5.58% for the quarter ended June 30, 2017. The bank’s deposit stood at Rs 1,36,629 crore out of which CASA deposits was at Rs 60,235 crore. CASA deposits constitute 44.09% of total deposits.