Public sector lender Bank of Baroda (BoB) has reorganised its corporate and institutional credit business by bifurcating activity into two units — large business and mid-corporates.
In view of the increase in demand for credit — working capital and investments — it will open 27 branches for mid-corporate entities with business of up to Rs 250 crore.
These branches would operate under four clusters headed by general managers. Currently, 15 corporate service branches take care of mid as well as large corporates.
After rationalisation, nine branches will cater to large corporates while 27 will be for mid-sized corporates.
As the potential for growth exists across the country, the number of branches will be more in the mid-corporate segment.
Subrat Kumar, chief general manager and head — institutional and corporate credit — BoB, said as economic activity picks up and the credit trajectory builds, mid-market is where the maximum growth is expected to come from.
In the mid-corporate segment, the bank plans to strengthen its operating model, branch network and credit decision making.
For business, these branches will focus on infrastructure, especially road projects, as well as chemicals, renewables and real estate.
Last year was an exceptional period where liquidity in the system was abundant. Large companies were demanding fine pricing, that is, low lending rates.
The mid-corporate segment does not get the attention it should be getting. Hence, the bank decided to give special emphasis to it and benefit from such focus, Kumar said.
Analysts said banks are in a position to price lending and services at a higher rate than what they charge to large companies, giving higher margins.
BoB’s corporate loan book rose by 3.1 per cent year-on-year (YoY) to over ~3 trillion by the end of March 2022.
The bank is looking at 15 per cent growth in mid-corporate lending during the current financial year, Kumar said.
According to Reserve Bank of India (RBI) data, credit to large industries recorded a marginal growth of 0.9 per cent in FY22. This is against a contraction of 2.5 per cent during the same period last year (FY21).
The bank did not divulge the size of its mid-corporate loan book. The share of corporate loans in BoB’s gross domestic credit was 44 per cent at the end of March 2022.
The bank is hiring over 300 people at the senior- and middle-management levels with expertise in corporate and institutional credit.
This includes 175 relationship managers at the senior and mid levels and 150 credit analysts at the middle-management level.