Non-payment of loans by small borrowers has led to an increase in the volume of non-performing assets (NPA) in the banking sector, Bank of Baroda Executive Director R.K. Bakshi said on Saturday.
Small borrowers, who take loans of up to Rs. 50,000 and are not able to repay them on non viability of projects and business or crop failures, has resulted in an increase in NPA volume, Bakshi told reporters here.
On the contrary, he said, the performance of large industrial houses in loan repayment has improved in view of the industrial growth rate.
Claiming that the NPA ratio of Bank of Baroda (BoB) at 0.31 per cent was better than any other bank, Bakshi said it was so also compared to any overseas bank benchmark.
He said the financial position of BoB was strong and the bank’s business is expected to touch the Rs. four lakh-crore mark by March 31.
When asked about the possibility of a hike in interest rates, Bakshi hinted that it could happen after two-three months in view of the bank’s improving credit portfolio.
“We expect an increase in interest rates after two or three months,” he said.
When asked if BoB had any plans to improve its credit ratio, he said though it would depend on the Reserve Bank of India’s policy, which is likely to come out next month, it was expecting an increase between 20 and 25 per cent credit growth.
Bakshi said BoB also plans to open 350 more branches across the country, including 11 in Jharkhand in 2011.
He said the bank would also recruit 3,500 persons, including in the officer grade, by December this year.