In conversation with Debashish Mukherjee, Executive Director, Canara Bank
The budget's emphasis on creating more employment and pushing infrastructure development significantly benefits Canara Bank, voices Debashish Mukherjee, Executive Director, Canara Bank.
In terms of financial and business performance, Canara Bank observed a significant increase, with Net Profit rising by 10.47 per cent year-on-year and Global Gross Business growing by 11.07 per cent year-on-year. What are the primary factors fueling this rally?
Canara Bank has consistently focused on the RAM (Retail, Agriculture, and MSME) sector, driving significant growth. Even in the corporate sector, the bank has achieved a growth rate of around 10 per cent. This combined effort has resulted in balanced progress across both RAM and corporate segments. Canara Bank aims to maintain a mix of RAM and corporate sectors in a ratio of 58:42; currently, the ratio stands at 57:43, aligning closely with their guidance.
This quarter's advances reflect this balanced approach, with retail growing by 23 per cent, agriculture and allied sectors by 8 per cent year-on-year, MSME by 7 per cent, and corporate by 7 per cent. The results demonstrate a well-rounded growth strategy encompassing retail, MSME, corporate, and agriculture sectors.
With major announcements in the budget regarding the financial sector, how does Canara Bank benefit from this?
The budget's emphasis on creating more employment and pushing infrastructure development significantly benefits Canara Bank. The special focus on MSMEs this time also aligns with Canara Bank's strategic areas. These sectors play a major role in enhancing the banking business, as nothing can proceed without the support of the banking system. With a thrust on infrastructure and MSMEs, Canara Bank, which already prioritizes these areas, stands to gain from increased activity and growth in these sectors, leading to overall benefits for the bank.
In June 2023, our net NPA stood at Rs 1.57 crore, while in June 2024, it had reduced to Rs 1.24 crore. Several factors contributed to this improvement.
Our bank has been implementing special measures to reduce NPAs for quite some time, which is reflected in our current gross and net NPA figures. Over the past few quarters, Canara Bank has actively pursued the reduction of NPAs. Additionally, our Provision Coverage Ratio (PCR) has increased to over 89 per cent, ensuring that our NPA books are well-covered through adequate provisioning.
Our efforts to enhance recovery are evident in the improved NPA figures. We've employed various tools such as NCLT, DRT, and the SARFAESI Act, and have also leveraged one-time settlements to address NPAs. These comprehensive measures have enabled us to recover both smaller and larger NPAs effectively, showcasing the proactive steps taken by the bank to improve its financial health.
There has been a significant improvement in vehicle loans, rising by 15.49 per cent year-over-year. Looking ahead to the upcoming quarter, we expect this growth trend to continue.
Our vehicle loan portfolio is relatively small, which makes this growth even more notable. We have achieved these results through two key strategies. First, we have made our interest rates very competitive, attracting more customers. Second, we have focused our efforts on financing large-ticket vehicles, which has contributed to higher loan amounts.
Canara Bank has exceeded the mandated norms in terms of agricultural lending. Could you please provide some clarity on this?
Agricultural and priority sector loans have been among Canara Bank's biggest strengths. This is evident from our strong presence in the Priority Lending Certificate (PLC) market. Last financial year, we earned over Rs 1,500 crore in this sector. In Q1 of this year alone, we have already earned more than Rs 1,300 crore, highlighting our continued focus and success in priority sector lending.
Our commitment to the agricultural sector is further reinforced by recent initiatives. We have introduced online and digital lending for self-help groups, enhancing accessibility and efficiency. Additionally, we have specialized branches dedicated to agricultural lending, focusing on infrastructure development within the sector.
Agriculture has always been a key focus area for Canara Bank, alongside other priority sectors. Our efforts and strategic measures in this area underscore our dedication to supporting and advancing agricultural development.
Disclaimer: The article is for informational purposes only and not investment advice.