IOB raises lending target for home, MSME loans

New Delhi: Indian Overseas Bank (IOB) will enhance lending to MSMEs as well as give out more home loans, its CEO Karnam Sekar said and expressed hope that the bank will turn profitable soon.

"We have devised a formula-based plan so that our recovery position is further improved. Our focus on recovery is yielding good results but our target would be on growing MSME and retail portfolios," Sekar said.

The Public sector bank, which is under the RBI's prompt corrective action (PCA) currently and has been incurring losses for the past 18 quarters, posted large losses because of huge non-performing assets (NPAs) for the past 7-8 years, caused mainly on account of large exposure in the corporate sector, he said.

Sekar added that the bank made the required provisioning. As a result, net NPAs (as percentage of total advances) as on December 2019 has come down below 6 per cent and that is a criterion to bring the bank out of the PCA, he said.

The bank's managing director and chief executive officer (MD & CEO) said that the next criterion is to make some profit. "So, this quarter onwards, not only this quarter but also for the coming quarters, we are likely to make profits."

"In the MSME segment, we are right now in the range of Rs 31,000 crore lending portfolio, we want to grow that portfolio to Rs 50,000 crore in the medium term of 2-2.5 years.

Similarly, in home loans, we are at Rs 13,000 crore level right now and we want to make it to at least Rs 25,000 crore in the similar time frame," he said.

While the average ticket size for the retail home loan segment is targeted to be raised to Rs 25-40 lakh from the existing Rs 20 lakh, there will be special focus on growing MSME (micro, small and medium enterprise) loans by targeting textile, automobile and small industries, he added.