The RRB from Madhya Pradesh has embarked on portfolio diversification with more thrust on the high yield advances:
Madhya Pradesh Grameen Bank has presence in 39 districts through the network of 866 branches under 14 regional offices, including 538 rural branches, 228 semi-urban branches and 100 urban/metro branches. All branches are on CBS platform. Sunil Sharma, Chairman, states: “We are providing majority of the banking services in the rural areas, subsequently we are serving rural population more. Our bank has no branch expansion and rationalization plans for this year.”
MPGB’s total deposits increased to Rs167.57 bn as of 21-22, registering a y/y growth of 3.76% and its advances got up by 14.27% to Rs15.23 bn. CASA deposits increased by 10% to Rs87.17 bn. Sharma, explains the business growth with reasons: “Our bank has propelled in almost all the business parameters. We have focused on deposit mobilization particularly low-cost deposits, credit expansion, and portfolio diversification with more thrust on the high yield advances, retail segment in particular. In deposits particularly in CASA deposits, we have launched special campaigns for opening of new saving bank accounts.”
Strategy: Product, Service
MPGB has diversified its portfolio into non-agricultural advances like retail loans like housing, vehicle, personal loans, loan against gold/silver, SME advances more particularly agro-based industries and other commercial advances for healthy growth in its advances portfolio. Sharma says: “We have launched local need-based products such as specific personal loan schemes for our Shahdol and Mandla Regions.”
The y/y growth in the depositors/borrowers of MPGB’s for FY 2021-22 is noteworthy. Deposit accounts have increased by 4.32% to 105.23 mn and loan accounts increased by 9.57% to 0.96 mn. Sharma informs: “Albeit, the online customers, availing banking services through debit cards, POS, AEPS, QR code etc. are very low, but the same are gradually increasing. As far as male and female customers are concerned, out of total 12.53 mn customers, 7.34 mn (57.85%) are male and 4.57 mn (36.48%) females. 0.71 mn (5.67%) customers fall under ‘other’ category. We have refined and revised certain internal processes to reduce the turnaround time (TAT) so as to provide better and speedy customer services. We have adopted best practices for customer service and our satisfied clientele base is widespread in Madhya Pradesh.”
Covid Impact: Mix & Match
Covid has left a wide range of impacts on different customer segments. Things have gradually started to return to normal post-pandemic, but there has always been a possibility that covid may hit again.
Sharma indicates: “Keeping that into consideration we have developed and implemented a mix and match approach for amendments in the service standards for the customers. Since majority of the customers are from rural geography, amid pandemic era we have been continuously encouraging our customers to avail the on-line/digital services through debit cards, POS, AEPS, QR code, etc, to cater their banking requirements and subsequently, we have witnessed a gradual increase in the digital transactions during FY 2021-22. Reacting to the need of the hour, we have been flexible enough while devising our strategies to absorb the aftermaths of the pandemic, and making every possible effort to inculcate the sense of using digital modes among the customers.”
NPA Down, Profits Up
While gross NPAs of MPGB as of 21-22 reduced by 18.96% to Rs14.32 bn, NPA percentage to advances reduced by 3.32%. Operating profit shot up by 53.58% to Rs1.40 bn. The bank has prepared a refined Monitorable Action Plan (MAP and started its implementation. It has constituted high-power committees headed by chairman and including regional managers to review and monitor NPA management and recovery efforts regularly.
Sharma claims: “We have brought reduction in the NPAs through proper credit monitoring and asset recovery. For more focused attention, we have categorised branches in very high and high priority branches. Compromise routes (OTS) are also adopted. Branches are regularly conducting awareness / recovery camps with more focused attention on educating borrowers on timely repayment, benefits of subvention and prompt recovery. As far as profitability is concerned, we have been continuously focusing on increasing the non-interest income, including income from treasury through trading of government securities and Priority Sector Lending Certificates (PSLCs) / Inter-Bank Participation Certificates (IBPCs) up to the optimum possible extent.”