When the name is ‘Bank of Maharashtra’, it’s natural to assume that the lender primarily operates in Maharashtra and the bulk of its branches are in the state, with a focus on Mumbai.
There was a time when the majority of the bank’s business, up to 70%, originated in Maharashtra. However, the Pune-based lender, which emerged as the Best Mid-sized Indian Bank in the BT-KPMG Best Banks and NBFCs Survey 2022-23, has ensured over the years that the concentration risk has been handled effectively.
At one point, 712 out of 1,833 branches were located outside Maharashtra. Now, there are 1,260 branches out of a total of 2,401 outside Maharashtra, according to Asheesh Pandey, Executive Director, Bank of Maharashtra, and currently the acting head of the bank.
Incidentally, A.S. Rajeev, the former MD & CEO of the bank, exited the bank on February 22 as the government appointed him Vigilance Commissioner in the Central Vigilance Commission.
“Every year, under the direction of our board, we have continued to have a strategy for opening a branch in each of the districts... So now around 40% of business is [from] outside Maharashtra,” says Pandey, who joined the bank as ED in December 2021.
“We are continuously opening 150-200 branches every year. We aim to start our branches with a minimum of Rs 10-15 crore of business. So, that is one of the accretions I am getting straightaway,” says Pandey, who spent nearly 24 years at Union Bank of India. Interestingly, this is the second successive year that the bank has emerged as the winner in this category.
Another highlight has been its robust CASA (current account and savings account) share of around 50%, which is among the best in the segment, and the bank has been taking various initiatives to defend its turf. Interestingly, the bank also targets government departments, including local bodies and salary accounts, to boost its CASA, despite facing rising competition—and not only from its banking peers. Competition extends beyond banks as the financial system involves multiple players, he explains. He mentions that in addition to the stock market, there are other investment routes such as mutual funds, NCDs, and IPOs, that compete with deposits.
Meanwhile, the bank is focussing on its digital presence and has revamped its internet and mobile banking offerings. “We have launched over 300 new initiatives in the past 12 months’ time in terms of technology and digital. We have revamped our mobile banking, internet banking, WhatsApp channels and all those... as we want to offer good customer services,” says Pandey.
The latest edition of the BT-KPMG study saw the bank scoring high on metrics like growth in loans and advances, deposits, balance sheet size, net NPA to net advances ratio, cost-income ratio, and return on capital employed. This performance has not gone unnoticed by analysts and the stock market. Shares of the bank have more than doubled in the past year even as the benchmark Sensex rose 23%.
“Bank of Maharashtra has made significant improvements in its financial performance, as evidenced by the decrease in gross NPA levels... The bank’s strategic focus on bolstering its resource profile, particularly through the cultivation of CASA deposits, has been instrumental in maintaining healthy margins,” says Shreyansh Shah, Research Analyst at broking firm StoxBox.
“Despite declining slippages and better recoveries, the possibility of borrowers defaulting on loans persists. To mitigate this risk, the bank must uphold rigorous underwriting standards, conduct ongoing monitoring, and ensure the timely resolution of delinquent accounts,” adds Shah.
Going ahead, the bank aims to reach around 2,500 branches by the end of FY24, while focussing on good-quality asset growth. This assumes significance as the bank was grappling with a huge bad debt problem—net NPA had zoomed to nearly 12%—around six to seven years ago.
Pandey, however, is quick to highlight the fact that the net NPA was a mere 0.22% as of December 31, 2023, compared to 0.47% a year ago.
@ashishrukhaiyar