Behind Bank of Maharashtra's strategy to establish a nation-wide footprint

Around five years ago, Pune-headquartered Bank of Maharashtra was grappling with a huge bad debt burden—with net non-performing assets of 11.76 per cent—and capital concerns, and the Reserve Bank of India had put it under the prompt corrective action (PCA) framework.

But a look at the bank now makes it difficult to believe that it was under the regulatory lens just a few years ago. In fact, it has emerged as the Best Mid-sized Indian Bank in the BT-KPMG Best Banks and Fintechs Survey 2021-22. Mid-sized banks are those with a balance sheet size of Rs 1-3 lakh crore, per the study.

A.S. Rajeev, the bank’s MD & CEO, says the credit goes to its customers as they didn’t waver in their support. “There was no withdrawal pressure even when the bank was under PCA. There was a lot of trust and attachment.”

This trust reflects in the bank’s highest share (over 56 per cent) of current and savings accounts in the industry. It achieved this through consciously targeting institutions like local government bodies, schools and colleges.

Now, the bank has put in place a very “focussed strategy” for its transformation. “We have taken a step-by-step approach to improve our operational efficiency. Quarterly operating profit three years ago was Rs 250 crore on a business of Rs 2.5 lakh crore. Now it is nearly Rs 1,500 crore on a business of Rs 3.5 lakh crore,” says Rajeev, who has been at the helm since December 2018.

The lender has also taken concrete steps to address the “concentration” issue, as at one point as much as 70 per cent of its business came from its home state. Currently it has a presence in around 240 districts, which it plans to grow to 760 districts by 2023-24.

Now, it is focussing on digitisation to keep itself relevant among new-age customers. “It has already happened in most areas. The main issue is the turnaround time. We have put in place a turnaround-time monitor that sends alerts right up to the MD-level if the cases are pending for more than the stipulated time,” says Rajeev.

The stock market has acknowledged the bank’s strong performance. Its stock has gained nearly 44 per cent YTD till January 10 compared to the benchmark Sensex’s 0.46 per cent loss.

Bank of Maharashtra, however, is still treading with caution; it has stayed away from sectors like aviation and sugar to name a few. “Sometimes slow and steady is better. We have to be careful as we are dealing with public money,” says Rajeev.

@ashishrukhaiyar