After the State Bank of IndiaBank of India, a large public sector has crossed the one trillion mark for outstanding books in June 2022. The bank is making course corrections to its strategy to increase share of personal and micro and small enterprises. MSMEs Bhavendra Kumar, Chief General Manager, Canara Bank, said earlier the bank was focused on agriculture term loans as well short term credit. He said that the bank thrust will also be on personal loans and MSMEs.
According to Kumar, a lot of customers are coming in for the MSME to bridge the working capital gap and that there will be a huge demand for immediate fund requirements in this segment.
Besides growing business volumes, the rising input costs are driving the demand for working capital.
The maximum loan tenure for loans against gold collateral in Canara Bank is two years. Interest rates vary from 7.4 - 7.65 per cent.
Lender wants to scale up the portfolio to a level of Rs 120,000 crore by the end of March 2023 with a personal loan of Rs 5,000 crore and MSME of Rs 2,000 crore. This loan book has gone from Rs 54,000 crore in March 2020 to around Rs 77,000 crore in March 2021 and to over 92,000 crore in March 2022.
Much of the business is concentrated in South India. Tamil Nadu and Kerala are big markets for gold loans where competition is fierce. This business is in the Eastern region and two metropolitan areas of Mumbai and Pune.
Kumar said that while working through 243 plazas, dedicated areas that are carved out of branches bank will also be used to dispense gold loans through co-pending partnerships.