Canara Bank Focuses on Digital Lending for MSMEs and Strategic Growth in Green Financing

Canara Bank Focuses on Digital Lending for MSMEs and Strategic Growth in Green Financing

Canara Bank is enhancing its digital lending framework, aiming to streamline processes for its 20 million Micro, Small, and Medium Enterprise (MSME) customers, said Managing Director and CEO K. Satyanarayana Raju in an interview with Financial Express. The bank is also exploring strategic expansions in high net-worth (HNI) customer services, green energy financing, and is taking a selective approach to infrastructure project funding.

Addressing concerns about high non-performing assets (NPAs) in the MSME sector, Raju emphasized Canara Bank’s commitment to MSMEs due to their potential for high returns. This week, the bank is launching a business loan engine that fully digitizes the loan approval process, facilitating comprehensive verification and underwriting for loans up to ₹2 crore. For larger MSME loans, the bank has centralized approvals at 163 MSME hubs, reducing the decision-making role of local branches to recommendations only.

With rising interest from foreign and private banks in affluent and HNI clients, Canara Bank is set to launch a new product specifically for its HNI customers on November 19, targeting those maintaining average balances above ₹10 lakh.

As for Canara Bank’s stake in Canara HSBC Life Insurance, Raju disclosed that a divestment is anticipated in the early quarters of the upcoming financial year. The bank is also adopting a selective stance toward infrastructure project financing, in line with the Finance Ministry’s guidance to concentrate on core lending and reduce exposure to infrastructure projects. “We plan to shift towards a 60:40 balance in RAM (Retail, Agriculture, and MSME) and corporate lending, transitioning from the current 54:46 ratio, with an emphasis on expanding RAM,” Raju noted.

Concerning the potential contraction in the Net Interest Margin (NIM) due to the policy rate cuts, Raju estimated an impact of 5-6 basis points on the 41% of the bank’s portfolio tied to the repo rate.

Notably, Canara Bank is also leading in green financing, having reached ₹10,000 crore in loans for green energy projects. The bank expects further proposals in this sector, as it continues supporting India’s renewable energy transition. Raju reaffirmed Canara Bank’s dedication to sustainable finance as a vital part of its future growth.