BoB eyes 5% growth in its MSME loan book for FY22

Talking about the remarkable growth witnessed by the bank under the portfolio in the last fiscal, Dhrubashish Bhattacharya, general manager (MSME), Bank of Baroda added in FY21 the growth in the MSME book was primarily on account of the ECLGS, where the Bank did around Rs 8000 crore of business in ECLGS alone. This year, we are not getting that leverage

The state-owned lender, Bank of Baroda (BoB) is looking at achieving a growth of five per cent in its MSME loan book for the fiscal year gone by over the previous fiscal. At present, the bank's MSME portfolio stands at around Rs 1,00,000 crore.

Talking exclusively to Bizz Buzz, Dhrubashish Bhattacharya, general manager (MSME), Bank of Baroda, says, "In MSME we have an approximately one lakh crore book in FY21. This year, in FY22, we are targeting a growth of around five per cent in this segment over the previous fiscal year.

Asked if he was satisfied with this comparatively low growth, he replied, "So if you look at the current situation, it is just not about growing the book. What is important is that you must maintain the portfolio health."

In addition, there are two types of business. One is the organic business. And one is the business which comes under the government schemes. So, this time the business which we have done organically is purely the non-government business - the core business so to speak. So there the growth will be higher, he said.

Talking about the remarkable growth witnessed by the bank under the portfolio in the last fiscal, Bhattacharya added in FY21 the growth in the MSME book was primarily on account of the ECLGS, where the Bank did around Rs 8000 crore of business in ECLGS alone. This year, we are not getting that leverage.

"In terms of NPAs, we expect our NPAs in MSMEs to come down in the years going ahead," he said. Bringing down the NPA is a function of sourcing and building a quality book as well as efficient collections.

BoB and PAISALO have recently entered into co-lending agreement to provide MSMEs and Women Entrepreneurs with Small Ticket Income Generation Loans.

Commenting on this, he said that PAISALO Digital is essentially a microfinance company. They are present pan India and largely give micro loans under the Joint Liability Group (JLG), primarily to women entrepreneurs. Currently, PAISALO digital is in expansion mode. It's an AA rated company.

He said, "We were keen to partner with PAISALO Digital to tap their expertise and experience in loan origination of micro loans with the help of an end-to-end digital platform for sourcing, servicing and recovery of small-ticket Income Generation priority sector loans."

Under the bank's co-lending agreement, the finance being extended is essentially a business loan; an income generation loan given to the unserved and the under-served segments of the country - micro, small and medium enterprises (MSMEs) and women entrepreneurs. PAISALO has a deep presence and deep understanding of the product and the loan will be processed and disbursed in a 100 per cent digital manner with no manual intervention at all.