The Hindu Business Line : P.J. Nayak re-appointed as CMD of UTI Bank

Dr P.J. Nayak (right), Chairman and Managing Director, UTI Bank, with Mr Surendra Singh, Director, at a press conference following the bank's board meeting in Mumbai on Wednesday. — Paul Noronha

Mumbai , Dec. 22

DR P.J. Nayak has been re-appointed as the Chairman and Managing Director of UTI Bank. The bank's board took this decision on Wednesday, a week after it decided to split the CMD post into the non-executive chairman and the managing director.

It was reported that UTI, the promoter of the bank, had initiated the move to split the top post. In the last board meeting, Dr Nayak was offered the post of managing director, minus that of the chairman, which he declined.

"The last few days have been surreal. But now I am happy," said Dr Nayak, talking to Business Line after the board meeting. The board has recommended a second five-year term for Dr Nayak, whose current term would have ended on December 31, 2004.

However, Dr Nayak has decided to continue only till July 2007 when he completes 60 years of age, the regular retirement age in UTI Bank. "This is my personal decision," Dr Nayak said.

In a notice to the stock exchange, the bank said considering the performance of Dr Nayak as the CMD of the bank for the last five years since January 1, 2000 and also taking into account the record and performance of the bank during his tenure, he has been reappointed as the CMD with effect from January 2005.

Meanwhile, Mr Surendra Singh, Director, UTI Bank, said the decision to split the position of CMD followed recommendation from UTI-I through a letter. It was found that the earlier decision did not find a "uniform favour with those interested in the bank," he told reporters after the board meeting.

The board's decision reflects the Government's view, as it has a 33 per cent stake, he said.

There were media speculations that the sudden exit of Mr M. Damodaran as the Chairman of UTI may have led to the change in the board decision.

About the bank's future, Dr Nayak ruled out "inorganic growth."

"Right now, we are only looking at organic growth. The bank has been growing at the rate of 35-40 per cent over the past five years. There is no need for us to look at inorganic growth, unless our current business model fails," he said.

The immediate agenda for the bank is to raise capital for boosting business growth and meeting the Basel II requirements. This would come by the end of the fiscal, he said.

Currently, the capital adequacy ratio of the bank is 10.67 per cent. The bank is looking at expanding its capital base by issuing 4.6 crore new shares. As per current valuations, this could translate into an amount of $180 million in the overseas markets.

"We have yet to decide whether to tap the overseas or the domestic markets; those modalities will be worked out later. We are also clear that we do not want to dilute equity periodically. The idea is to raise funds that can last us for the medium term," said Dr Nayak.

On the bank's plans for international expansion, Dr Nayak said the bank is gearing up to set up representative offices in Dubai and Shanghai, branches in Sri Lanka and Hong Kong and also an offshore banking branch in Singapore.

UTI Bank also wants to get into tier-2 cities. "We have opened five rural branches so far and will open another five shortly. Our strategy is not to spread our resources thin, but to plan area financing. We are taking agri-lending seriously and will develop a professional model," he said.

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P.J. Nayak re-appointed as CMD of UTI Bank