Big plans in pipeline for SME sector
CL Jose
THIRUVANANTHAPURAM: Kerala Bank is expected to achieve a significant milestone by generating its first net profit since its inception, during the financial year 2023-24 (FY24).
As is known to everyone, thirteen District Co-operative Banks (DCBs) have been merged with the Kerala State Co-operative Bank (KSCB) on November 29, 2019, to create a new-look KSCB, which has been nicknamed as Kerala Bank.
Since its inception about five years ago, Kerala Bank has been unable to close a single year with a net profit, thanks to the baggage of assorted assets the bank inherited from 13 DCBs.
By the way, Malappuram District Cooperative Bank kept away from joining the KSCB leaving the grouping short of one DCB. However, of late, Malappuram DCB has also given its in-principle consent to join Kerala Bank, but it has been learnt that a legal hurdle needs to be overcome before it could finally become part of Kerala Bank.
To be in the black
There are convincing reasons to believe that Kerala Bank will finish this financial year with a net profit (to be in the black means to be in profit in contrast to ‘to be in the red’).
During a one-to-one interview with businessbenchmark.news at the Kerala Bank head office in Thiruvananthapuram, Jorty M Chacko, the newly appointed chief executive officer (CEO), however refused to make any comment on the FY24 financials.
“We are finalizing our FY24 accounts; soon you will come to know how we have performed in FY24,” is all what he had to say about FY24 financials.
For one, Kerala Bank managed to recover Rs425 crore from Kerala Transport Development Finance Corporation Limited (KTDFC), which would otherwise have gone down the drain as an unrecoverable bad loan.
Again, Rs350 crore loans disbursed against the paddy receipt sheet (PRS) have safely reached the bank’s coffers.
SME sector
The bank has big schemes in the pipeline for small and medium enterprises (SMEs), the apparent lifeline of a country’s economy. Chacko said the bank that has more than 85,000 SME customers not only has plans to increase the number of borrowers in this segment, but at the same time has the blueprint ready for innovative products for SMEs at competitive pricing.
“This will attract more good customers in this segment. I need to confess at this juncture that the SME sector has contributed substantially to the non-performing assets (NPAs) of the bank, which is a challenge that stares at the bank now,” he added.
Jorty Chacko, who was the executive director of IDBI Bank in charge of Retail Banking, prior to taking over the Kerala Bank assignment, said Kerala Bank has other challenges too to overcome, the main being the capital adequacy for the future journey.
