Chairman and Managing Director, B. A. Prabhakar
Andhra Bank is in the mood to scale up its retail and small and medium enterprise (SME) loans portfolio at a faster pace than the wholesale loan portfolio. By doing so, the Hyderabad-based public sector bank will achieve two objectives — diversify risks and improve yield on advances. According to Chairman and Managing Director, B. A. Prabhakar, the bank’s total business (deposits plus advances) will grow by over Rs 1-lakh crore in the next two years.
“We will focus on the retail and SME space. Right now the share of retail, agriculture and SME advances in total advances is around 45 per cent. We would like to take the share of these advances to about 60 per cent. This will happen over the next three to four years. The direction is towards that. Growth rate in the retail and SME segments will be higher than the growth rate in corporate business. This thrust on retail and SME loans will help us in risk diversification. Today, our exposure to corporates is in a few sectors such as steel, power, and infrastructure. So, our loan portfolio requires diversification. Retail and SME loans are small-ticket loans and we believe that focus on them will be a very good risk-diversification strategy. Moreover, on a risk-adjusted basis, the yield on retail and SME loans is better,” says Prabhakar.
Andhra Bank has an exposure of about Rs 300 crore to microfinance institutions (MFIs) but believes that Self-Help Groups (SHGs) are a better way of financing the poor women in rural areas. In fact, Andhra Bank has a good exposure to SHGs, of around Rs 2,500 crore.
