The Hindu Business Line : `Zero net NPA is a debatable concept'

THE Chairman and Managing Director, Vijaya Bank, Mr M.S. Kapur, has been guiding the fortunes of the bank since August 2002. In his 35 years in banking, Mr Kapur has held various important positions including officiating CMD of Punjab and Sind Bank and Syndicate Bank.

Mr Kapur was in the Capital to inaugurate the implementation of core banking solution (CBS) in one of the bank's largest branches in the city. He took some time off to talk to Business Line.

You have inaugurated the implementation of your core banking solution (CBS) in the Barakhamba Road branch in the Capital today. What is the overall technology implementation for the bank progressing?

Vijaya Bank today has around 890 branches. The CBS, being implemented with the help of Infosys and Wipro, is part of the technology drive of the bank. We have already implemented CBS in 23 branches. Today's is the first in our branches in the Capital.

By March 2005 we should have CBS in 130 branches and by March 2006, 380 branches would go live under CBS, capturing 90 per cent of the bank's business including in rural areas.

Unlike in the previous year, banks are likely to witness pressure on treasury profits during this fiscal. How is the profitability of Vijaya Bank expected to shape up during the year?

It is true that last year, banks had seen windfall profits from their treasury operations. This is slowly drying up. With half the year gone, there is unlikely to be much change in the present scenario and banks would remain under stress on this count. However, we are witnessing a strong growth in credit offtake. This should significantly neutralise the negative impact of the fall in treasury profits.

Vijaya Bank's net non-performing assets (NPAs) stand at below one per cent. This is one of the lowest among PSU banks. When do you see yourself as a zero net NPA bank?

I am not keen to declare Vijaya Bank at a zero NPA bank in a hurry though my net NPAs at present stand at around 0.7 per cent. I feel that whether a bank should have a zero net NPA or not is a debatable point. One you declare yourself as a zero NPA bank, you have set yourself goal that might not be achievable at all times to come. So, even if there is a slight increase in the net NPAs, that threshold is breached. I would like to declare my bank a zero NPA bank only if I am absolutely sure that I would be able to retain it at zero at all times come what may. As of now, I am happy to have net NPA levels of less than one per cent. Any bank should be proud of having such a low level of bad debts.

What are Vijaya Bank's immediate pans for expansion?

Last fiscal, we had opened 38 new branches. I presently hold licences for another 48 more branches. The list is with the RBI. These branches would be spread across the country. We are at different stages of opening these branches. Within the next 2-3 months, we expect to open all these branches. Once that is done, we would approach the RBI for new branch licences. We would be looking at areas where we have surplus staff and good business potential. The appetite for more branches of course is in the metros, specially the important business centres.

More Stories on : Interview | Public Sector Banks | Non-Performing Assets

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Bankers do field work, literally!

Orders reserved on Fabian plea

Travelex ties up with HDFC Bank

Rupee stronger; securities decline

SBI to hold Maha Utsav in Vizag

Syndicate Bank product

States seek floaters to prepay Central loans

Lenders readying BPL debt recast

Bobcards plans global prepaid dollar card

ICICI Bank's festival scheme for card holders

`Zero net NPA is a debatable concept'

Natarajan retires as TMB chief