BoB reorganises corporate and institutional credit business

The public sector lender BoB has reorganized its corporate and institutional credit business by bifurcating activities into two units - large business and mid-corporates.

In response to the increase in demand for credit - working capital and investments, it will open 27 branches for mid-corporate entities with business of up to 250 crore.

These branches would operate under four clusters headed by general managers. Nine branches will cater to large corporates after the reorganization, while 27 will be for mid-sized corporations.

The number of branches in the mid-corporate segment will be more because of the potential for growth across the country.

Subrat Kumar, chief general manager and head of institutional and corporate credit, said as economic activity picks up and the credit trajectory builds, mid-market is where the maximum growth is expected to come from.

The bank plans to strengthen its operating model, branch network, and credit decision making in the mid-corporate segment.

These branches will focus on infrastructure, especially road projects, as well as chemicals, renewables and real estate for business.

Last year was an exceptional period in which there was abundant liquidity in the system. Large companies were demanding fine pricing, that is, low lending rates.

The mid-corporate segment doesn't get the attention it should be getting. The bank decided to give special emphasis to it and to benefit from this focus, Kumar said.

Analysts said that they are able to price lending and services at a higher rate than what they charge to large companies, giving higher margins.

Kumar said the bank is looking at 15 per cent growth in mid-corporate lending during the current financial year.

Credit to large industries recorded a marginal growth of 0.9 per cent in FY 22 according to Reserve Bank of India RBI data. The bank did not reveal the size of its mid-corporate loan book last year, because of a contraction of 2.5 per cent during the same period last year, FY 21. The share of corporate loans in BoB's gross domestic credit was 44 per cent at the end of March 2022.

The bank is hiring over 300 people at senior and middle management levels with expertise in corporate and institutional credit.

This includes 175 relationship managers at the senior and mid levels and 150 credit analysts at the middle management level.