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Our Bureau

Chennai , July 1

THIS year again, many banks are having to book depreciation in the first quarter of the year, when they transfer securities from `available for sale' category to `held to maturity'. But Syndicate Bank finds itself an exception.

In April, the bank did transfer some Rs 600 crore worth of investments to HTM, but it did not have to suffer any depreciation, as the securities were already at market value. For the same reason, the bank does not expect to record any loss on this account during the rest of the year.

Mr D C Pai, General Manager, Treasury and International Banking Division, told Business Line that the bank had decided to bring down its investments to the statutory minimum. This makes sense for the bank because its average yield on investment (7.65 per cent) is less than the average yield on advances (8.25 per cent).

Credit offtake is picking up and Syndicate Bank gets funds for lending by liquidating its investments. As at end March 2005, the bank had about Rs 4,000 crore of investments more than the statutory minimum. This corresponded to 41 per cent of deposits, against the requirement of 25 per cent. By now, the bank has pruned the percentage to 33 per cent of deposits. The bank's intention is to prune it further to 25 per cent, Mr Pai said.

At a press conference here today, Mr Pai said that the bank could bring down its net NPAs to 1.58 per cent, "without any write-offs."

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