The Hindu Business Line : Karnataka Bank plans to open 10 branches in North

THE Chairman and Chief Executive Officer of Karnataka Bank, Mr Anantakrishna, will be completing his fifth year in office on Wednesday. He sees opportunity in expanding credit to small and medium enterprises.

In an interview to Business Line, he spoke about bank's growth plans and other issues.

Excerpts:

What is the growth strategy of the bank?

We have good presence in the South. Of the more than 380 branches, around 350 are situated in the South. We have 35 branches in the North, mainly in Gujarat, Madhya Pradesh, Uttar Pradesh, Delhi and Punjab. We have business connection in many areas of northern India, though our branches are not there. We will like to cater to the needs of customers in those areas by setting up our own branches. We want to open around 10 branches in the North in the current fiscal.

Are you going for acquisitions to increase your presence there?

In the North, there is no bank to acquire. We are not looking at inorganic growth. We are in sustainable organic growth mode.

Are you open for a merger?

We are not at all open for that. Since we are a niche player in our own area, we believe that we have a role to play.

What will be the focus area for growth?

We will concentrate on small and medium enterprises (SMEs) and agriculture sector. Various schemes have been planned for SME sector.

Our present allocation to SME sector is 17.44 per cent. We want to achieve a minimum of 20 per cent disbursement in this sector.

So far, our experience in this sector is very good.

In agriculture sector, we are planning to increase credit disbursement by Rs 350 crore. The bank will examine the potential in northern States where there is scope for extending large-scale loans to agriculture sector. We will also look at financing for contract farming.

How are you attracting and retaining customers?

Our main focus is customer relationships. We have been maintaining it and will continue our personal relationship with our customers.

We will not lose human touch, even while giving importance to technological initiatives. We have been able to attract and retain senior citizens with our deposit products.

You have considerably low exposure in retail segment. Why?

It may look like so. But, still we have 30 per cent exposure in retail segment.

In housing loans, we have around Rs 462 crore of Rs 1,800 crore.

We have exposure in vehicle loans, though it is comparatively low. As mentioned earlier, we have exposure to small business and trade. The bank wants to encourage this sector.

Our `vartak' scheme was a hit among small traders.

In this scheme, the bank lends up to 9 lakh without asking for stock statement.

When are you planning to meet Basel II norms?

We will be ready for Basel II norms by March 2006. We have finalised the software and have placed orders.

Technological requirements have been put in place.

Private sector banks have been asked to raise their capital. What steps have you taken in that matter?

We have increased our capital to Rs 160 crore.

We recently went for a rights issue. Our capital adequacy ratio is 14.16 per cent.

Will there be a hike in deposit and lending rates?

It may not go up. Even if it goes up, it may be up by 25 basis points.

It is steady for now.

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