Hopeful of achieving 5-6% credit growth in FY21: Manas Ranjan Biswal, Executive Director, Union Bank of India

Union Bank of India’s early estimate is that about 5-6% of its loan book may undergo restructuring under the Reserve Bank of India’s scheme, says executive director Manas Ranjan Biswal. In an interview with Mithun Dasgupta, Biswal says the Hybrid Annuity Model for highway projects, solar and city gas distribution and lease rent discounting are the areas where opportunities exist to grow the bank’s corporate loan book. Excerpts:

What kind of growth in advances are you expecting for this fiscal, given the prevailing pandemic and rapidly changing economic conditions?

During the second half of the last (second) quarter, we saw a good momentum in the number of new liabilities and asset accounts being opened. With high frequency economic indicators showing positive trends, Union Bank of India (UBI) is hopeful of registering 5-6 % growth in credit during the current fiscal. This should be supported by sustainability of agricultural credit, recent pick-up in retail and MSME sectors and sector-specific opportunities for lending to corporates.

Will the Reserve Bank of India’s on-tap TLTRO improve overall lending?

The recently announced TLTRO of Rs 1 lakh crore is yet another step by the RBI to channelise liquidity towards specific sectors. This window is available for extending credit as well as through investment route. We expect credit flow to increase further under the recently announced TLTRO. However, we are awaiting detailed guidelines in this regard.

In corporate segment, what are the sectors do you feel could boost loan demands?

There are sector-specific opportunities in the corporate segment. For example, there are projects from Hybrid Annuity Model (HAM) in road sector, solar and city gas distribution in energy sector. There are also opportunities in lease rent discounting. Moreover, corporates are also looking at consolidating their relationship with few banks which will be a good opportunity for a large bank like ours.

For your bank, what could be the total size of loans that could come under restructuring?

First of all, I must compliment RBI for allowing “One Time Restructuring”. This measure will help save immense enterprise value that our financial ecosystem has facilitated in recent years. Our early estimate is that about 5-6% of the loan book may undergo restructuring.

Do you expect retail loan growth during this festive season?

Retail loan demand is coming back if we see the flow data of past few weeks. However, this could also be a pent-up demand, and therefore, we need to watch out for a couple of more months. Nonetheless, UBI always brings festive delights for its customers. In the current year too, we are planning to launch a special festive offer starting mid-October. This will include waiver and concession in charges and fees, special offer for selected set of customers and loan segments.

Andhra Bank and Corporation Bank got amalgamated into Union Bank of India with effect from April 1, 2020. How has this merger helped your bank expand total business and capital base?

This amalgamation has doubled the scale and size of the bank. And to give a perspective, the total business of the amalgamated entity (as on June, 2020) was Rs 15.19 lakh crore with a customer base of around 12 crore. The capital base has increased to Rs 66,541 crore as of today, which will usher the growth in future.