Canara Bank is launching end-to-end digital lending for its entire bouquet of 20 million MSME customers, K Satyanarayana Raju, MD and CEO, tells FE. Excerpts:
The MSME sector has contributed the highest in terms of non-performing assets. How do you plan to bring that down?
We cannot neglect financing to MSMEs because this is a highly potential area. It gives banks higher returns compared to all other portfolios. This week, we are launching a business loan engine under which the entire verification process and other related things for the whole MSME portfolio of 20 million customers will be done digitally.
By introducing this digital end-to-end process, it will help us improve the quality of underwriting for loans up to Rs 2 crore. For loans above Rs 2 crore, we have centralised the process and created MSME hubs in 163 centres, instead of leaving the responsibility to local branches. Only these centres can give loans to MSMEs. Local branches can just recommend.
What are plans on tapping affluent and HNIs since foreign banks and private banks have been slowly increasing their focus on this segment?
We are launching a product on November 19 for high net worth individuals. The product is for our existing HNI customers whose average balances are above Rs 10 lakh.
There were talks about Canara Bank reducing its stake in Canara HSBC Life Insurance company. Any update on that?
We are expecting it to happen in the first or the second quarter of the next financial year. The process is going on.
Finance minister said banks should focus on core lending business and reduce lending for infra projects. What is your view on that?
We are one of the largest public sector banks. If we reduce our infra loan book, the country’s infrastructure will have an adverse impact. However, we are selective while providing credit to the sector. We want to move towards 60% of RAM and 40% of corporate. Two years back, we were at 54% of RAM and 46% of corporate. We want to grow the RAM sector more aggressively than the corporate.
How much contraction in NIM you expect from cuts in policy rate.
It may have an impact of 5-6 basis points. The 41% of book which is linked to the repo rate (external benchmark lending rate) will be impacted by the rate cut cycle.
Canara Bank has always been active in green financing. What are your future plans here?
We are one of the major banks in India for financing green energy projects. We already touched almost Rs 10,000-crore green energy financing. Various proposals are also coming for green energy.