BOI to increase agro sector financing

Bank of India (BOI) has decided to increase financing to the agriculture sector for various operations besides expanding it's overseas operations during the current financial year, said M Balachandran , chairman and managing director of the bank.

Addressing a press conference, he said the bank would increase financing for crops, food processing, post-harvest facilities, including construction of cold storages and grading of crops.

The bank which has 60 per cent of its operations in rural areas had found that the credit facilities to the rural areas were as profitable as they were in the urban areas. "Rural sector credit advancement appears to be better as compared to lending to corporate houses that negotiate on lending terms," he said.

Balachandran said the bank would help the farmers on individual as well as group basis in case they would like to diversify to agro processing.

He said the agriculture credit in Punjab for current year has been targeted at Rs 850 crore as compared to Rs 607 crore and Rs 467 crore in the previous two years whereas in Haryana the target is Rs 600 crore as compared with Rs 392 crore last year.

He said the bank would soon open a full-fledged branch in China at Schezin, close to Hong Kong, where the existing office would be upgraded.

The bank would also expand its activities to Belgium, Vietnam, Tanzania and Doha by March 2006. At present, it has its operations in 12 countries.

Balachandran said that for the bank's overseas operations a technical hub would be set up at Singapore.

He said the bank was getting 17 per cent of its profit from overseas operations which were 20 per cent of the total annual business of Rs 1,35,000 crore.

He said that on the domestic front the bank would add 50 more branches to its existing network of 2,500 branches.

The Dal gate branch in Srinagar, which was shut down due to militancy in the Kashmir valley, would be reopened soon.

Balachandran said the NPA of the bank had come down "sharply". The gross NPA is targeted at 3.8 per cent during 2005-06 as against 5.48 per cent and 7.86 per cent in 2004-05 and 2003-04 respectively, he said adding that the net NPA is targeted to be brought down to 1.50 per cent during the current year as compared with 2.77 per cent and 4.50 per cent in the previous two financial years.

He said the bank targeted to bring down the NPA to zero per cent or maximum of 0.25 per cent by March 2007.

He said the aims of the bank include 18-20 per cent growth in deposits, 23-25 per cent in credit and profit of Rs 800 crore.

Balachandran said the bank would focus on retail banking, agriculture and small and medium enterprises (SME) advances during 2005-06.

He said that the growth in retail sector was 29 per cent last fiscal and this year it is targeted at 40 per cent out of which housing, consumer and vehicle loans are expected to constitute around 28 per cent.

On the agriculture sector the bank was targeting 31 per cent as against 30 per cent last year which actually increased by 33 per cent. This year also the bank would go much ahead of the target of 31 per cent,said Balachandran.

He said that for the SME sector a growth of 20 per cent has been targeted in the current fiscal as against 17 per cent last year. The bank has also signed an MoU with the SIDBI for ensuring the growth of the SME sector, he added.

He said that the bank has also decided to go in for massive technical upgradation by increasing the number of inter-connected branches to 1,100 from the existing 750.

The staff becoming spare due to technical upgradation would be used for marketing, recovery and other related jobs, said Balachandran.

He said that in Haryana two new branches at Gurgaon and industrial model township (IMT) at Manesar (Gurgaon) would be opened while in Punjab a new branch at Banga would be opened. Seven more branches are planned to be opened in the two states, he added.