Rythu Bandhu better than loan waiver: Syndicate Bank CEO

“Telangana is doing a good job with Rythu Bandhu. I think the scheme is great as the benefit is given depending the on the acres of cultivation”

By Author  |  Published: 13th Jan 2019  12:19 amUpdated: 13th Jan 2019  5:59 pm
Rythu Bandhu
Syndicate Bank MD-CEO Mrutyunjay Mahapatra

Hyderabad: Continuing to impress policy and banking industry officials, Telangana’s Rythu Bandhu scheme came in for praise from Syndicate Bank MD-CEO Mrutyunjay Mahapatra.

Rythu Bandhu, or the Farmers’ Investment Support Scheme, is a welfare programme taken up by the Telangana government to support farmers’ investment for two crops a year. The government extended a support of Rs 4,000 an acre per cropping season to farmers. The scheme was a huge success as 58.3 lakh farmers benefited from it. The government also announced to increase the amount by Rs 1,000 to make it Rs 5,000 per acre.

“Telangana is doing a good job with Rythu Bandhu. I think the scheme is great as the benefit is given depending the on the acres of cultivation,” he said.

Batting for direct benefit transfers, Mahapatra said loan waiver, from a banking industry perspective, will create a bad credit culture. As a result, banks will shy away from extending loans to farmers at the right time. Loan waivers will give a short-term benefit to farmers, but harm them in the long run.

“There cannot be an endless process of debt waiver. In my view, rather than debt waiver, direct benefit transfer scheme to agriculturists is good,” he said, referring to Telangana’s scheme.

Apart from Telangana, Odisha, Jharkhand and West Bengal governments too implemented this scheme and there were indications of the Central government too emulating Telangana’s Rythu Bandhu and Rythu Bhima on a pan-India basis. The scheme was also lauded by NITI Aayog member Ramesh Chand recently.

‘Focus on improving recoveries of bad loans’

Syndicate Bank will achieve break even in March and will look to be profitable from June 2019. It will also focus on improving the recoveries of NPAs, tells its Managing Director and Chief Executive Officer Mrutyunjay Mahapatra, who was on his maiden visit to Hyderabad after assuming charge of the public sector bank, to B Krishna Mohan

Focus areas
Currently, our focus is on retail, MSME, housing and personal express credit. We are also looking at equipment finance, lending based on GST data and formalised economy. We will look at how do we get that data to determine the turnover and give quick loans.

We are expecting that we will be profitable on break-even basis by end of March and start doing proper profits from June 2019.

We are aligning people, processes, technology and governance. We have given 1,200 people in a specialised manner to go and tackle this problem. We have simplified the process so that compromises and onetime settlements are done quickly. We have also brought in a new technology to allows recovery based on geo-tagging. We have created a Recovery and Resolution vertical. We are de-layering so that the process happens quickly. We will use all possible measures to increase the recovery. We negotiate, sometimes use Sarfesi Act or sometimes take a haircut as much as 60 per cent. This varies from case to case. If are hopeful of recovering about Rs 1,500 crore in three to six months.

Fund raise plans
We are looking to raise about Rs 500-600 crore through employee share purchase scheme. In the recent times, we have raised about Rs 2,360 through other channels.

Credit offtake
Currently the banking industry as a whole is seeing around 7-8 per cent of growth. But this credit is happening in a distributed manner. It also happening in the MSME sector. But in the corporate sector as well as other sectors , the green shoots are visible but the offtake is not seen. Hopefully, it will happen in the last quarter of the financial year.

Economic situation
I believe that the budgetary deficits will be contained within whatever the finance minister told during the last budget. If you look even at the market, the yield expectations on the Government securities are holding, in the sense that it has come down. Market is not expecting that the government will borrow a quite lot of money. If that would have been the case, then the yield expectations would have gone up. Both the market as well as Government show us a stable kind of scenario.

Expectations from Budget
I expect fomalisation will be given a further boost in the ensuing Budget. I am sure there will be some social benefit oriented schemes as well. I am expecting that the direct tax payers, who are the salaried class, will get some further benefit.

Hyderabad zone
Hyderabad zone is doing well and is also doing well in the recovery. The zone is seeing a lot of traction in terms of savings bank and current account mobilization. With the energized workforce and new initiatives we are taking, I am hopeful of doing much better in days to come.