Bank of Baroda plans to step up corporate loans

India’s second-largest state-owned lender, Bank of Baroda, is making a comeback to corporate loans and eyeing strong growth paced by a revival in the capex cycle. The bank, which expanded corporate loans by 3% last year, is aiming to double the pace of expansion this fiscal.

A rising interest rate cycle, wider spreads, better quality assets and risk-return metrics make corporate loans a profitable business, managing director Sanjiv Chadha told ET.

“We believe that the rate normalisation cycle allows us to have decent growth along with decent margins; hence we believe that corporate loans will grow significantly quicker for us as compared to last year,” Chadha said.

He added that the bank would shed its conservative view on the corporate segment as the return ratios were improving.

“You always try to make sure that your decision makes sense based on the risk-return viewpoint,” he said. “Last year, because of the very high overhang of liquidity and the unnaturally low rates, we found in the corporate segment at times the spreads available to us were too narrow given the risk we carry. So we had been fairly conservative in growing our corporate credit portfolio.”