Bank of Baroda (BoB), which is in the midst of a merger with Dena Bank and Vijaya Bank, seems to be unaffected by its exposure to the beleaguered IL&FS group.
Banks have a loan exposure of about ₹55,000 crore to the debt-laden IL&FS and its 348 entities. The IL&FS group had total borrowings, including bank loans, of about ₹91,000 crore as of March-end 2018.
PS Jayakumar, Managing Director, Bank of Baroda, agreed that the bank has an exposure to IL&FS, but he said the lender’s exposure to the infrastructure firm and all other NBFCs is “balanced” as of now.
He was speaking at the launch of Baroda Kisan Diwas, in Mumbai, on Tuesday.
In the past couple of months, the infrastructure development and finance company, and its arms, have reported defaults on their debt obligations, which has had a cascading impact on mutual funds and Non-Banking Financial Companies (NBFC).
However, the public sector bank will continue to lend money to NBFCs. Commenting on this issue, Jayakumar said: “We will continue to lend to NBFCs and HFCs in line with our total exposure to them. Some exposures are increasing. Overall, we also have portfolio caps.”
Notwithstanding the State elections and market volatility, the BoB chief emphasised that this will not slow down loans.
Pointing out that Non-Performing Assets are declining, Jayakumar said: “Last year, NPAs were ₹59,000 crore. However, this year, it has declined to ₹52,000-53,000 crore.”
Meanwhile, as part of the government’s initiative to double farmers’ income by 2022 and to lend support to the same, Bank of Baroda has signed 42 MoUs with several companies and government agencies to assist farmers, suppliers and vendors to offer various financial products.