The Hindu Business Line : Corpn Bank plans representative office in Dubai

In an interview to Business Line, the Chairman and Managing Director, Mr V.K. Chopra, spoke on various aspects, including bank's technology initiatives and expansion plans, among others. Excerpts:

What are the bank's plans for overseas foray?

We are planning to set up a representative office in Dubai, as more than 15 per cent of our deposits are from non-resident Indians in West Asia. Our board has approved the proposal and we have applied to the Reserve Bank of India. We expect the representative office to be set up in the current financial year. It can be upgraded to a branch in due course of time.

Boston Consultancy Group (BCG), appointed to examine various options suited for our growth, suggested that we could go to Dubai, Antwerp, the US and Paris. Considering the business profile of the bank, we chose Dubai. We can also go to Antwerp, as we have a strong and effective portfolio of diamond traders. But, it will take some more time. Could you explain about strategic investment in a domestic bank? Will there be any acquisition?

According to the present guidelines, no public sector bank can invest more than 5 per cent of the investee bank's capital. We can't take over any bank. Takeover will happen when a bank is in bad shape. I never said that we would acquire a bank. Strategic investment means small investment.

Are you ready to meet Basel II norms?

All necessary steps have been initiated, and we will be one of the banks geared to meet the challenges of Basel II. Our capital adequacy is more than 16 per cent. We keep on evaluating it. If there is need to raise money, we have all the options available. We will explore whatever options we consider less costly. We can go for Tier-II capital, preferential shares or tap the equity market. So far, we have not firmed up our mind on this aspect. Certainly, we would like to keep our capital adequacy, even after we entered into Basel II, at around 14-15 per cent.

What are the technology initiatives undertaken?

We are among the IT-savvy public sector banks. At present, we have brought 384 branches under the core-banking solution (CBS). We are planning to cover 500 branches under CBS during the current financial year. With that we will cover more than 80 per cent of our business under CBS.

What are the plans for implementing real-time gross settlement (RTGS) system?

At the end of March, 51 branches were under RTGS. During the current financial year, one-third of our total branches - nearly 300 - will be under RTGS. Actually, 100 will be done within the next month itself.

How is the response to this system?

It takes time for every scheme to become popular. Initially, the usage is always less, as there is not much awareness. It will take time for the volume to build up. Even staff members have been told to create awareness about this.

Will there be any hike in housing loan interest rates?

There is no doubt that rates of interest on deposits, of late, have marginally gone up. There is a pressure on the banks.

But, at the same time, there is a great deal of competition among the banks. In the short-term, it may not be feasible to hike rates because of competition.

About bank's brand building exercise?

The BCG has given us a report on building a brand image. They surveyed all the areas of banking to find out the awareness level among the public. Based on their recommendations, we will be launching more aggressive publicity campaigns. In certain places we are not very well ahead.

We are going to open 70 more branches, 250 more ATMs.

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