Non-payment of loans by small borrowers has led to increase in volume of non-performing assets (NPA) in the banking sector, Executive Director of Bank of Baroda (BOB), R K Bakshi said today.
Small borrowers taking loans from banks upto Rs 50,000 are not repaying them, citing non-viability of projects, business failure or crop failure. This has resulted in an increase in the volume of NPA, Bakshi told newsmen here.
On the other hand, he said, the performance of large industrial houses in loan repayment had improved in view of the industrial growth rate.
Claiming that the NPA ratio of BOB at 0.31 per cent was better than any other bank, Bakshi said the ratio was better also compared to any overseas bank benchmark.
He said the financial position of BOB, which has capital adequacy of 14.5 per cent, was strong and was expected to touch Rs four lakh crore business by March 31.
On a query about a hike in the interest rate, Bakshi hinted at the possibility after two or three months in view of the improving credit portfolio.
"We are expecting an increase in the interest rates after two or three months," he said.
Asked whether BOB had any plan to improve the credit ratio, he said though it would depend on the credit policy of Reserve Bank of India, which was likely to come out with it next month, BOB was expecting an increase between 20 to 25 per cent credit growth.
Referring the credit-deposit ratio in Jharkhand, Bakshi said it was at 51.18 per cent compared to 43 per cent in the total banking sector.
Bakshi said BOB had plans to open 350 branches across the country including 11 in Jharkhand next year.
He said BOB would recruit 3,500 persons, including in the officer's grade, by December.
