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Corporation Bank will reduce its outstanding low-yield investment in Rural Infrastructure Development Fund (RIDF) by ₹2,000 crore in 2015-16.
The bank will reduce RIDF investment by ₹2,000 crore and deploy it in better yielding assets, said SR Bansal, Chairman and Managing Director of Corporation Bank, after the FICCI-organised Banking Conclave here on Friday.
In 2014-15, as the bank has met the priority sector lending norms it has decided against making fresh investments in RIDF and also plans to reduce the outstanding exposure to the fund.
It currently has outstanding investment of ₹10,000 crore, fetching 6 per cent interest income. “We intend to wipe out the investment fully by the end of next fiscal,” Bansal said. The bank, because of the earlier shortfalls, had to notionally forego interest income worth ₹700 crore annually. The bank’s net interest margin for 2014-15 stood at 2.07 per cent. The bank achieved the regulatory targets for lending to the priority sector last fiscal. As of March 31, 2015, priority sector advances of Corporation Bank, at ₹53,191 crore were 41.92 per cent of the adjusted net bank credit (ANBC) as against the RBI norm of 40 per cent.
Core banking Bansal said the bank was rolling out its latest version of CBS (core banking solution) this month at a cost of ₹360 crore.
“By the end of this fiscal, all branches would be connected to this system.” He also said that this month, the bank would set up two forex hubs — in Bengaluru and the other in Mumbai. The hubs would gradually be connected to all branches.
Corporation Bank this month has invited asset reconstruction companies for a proposed sale of non-performing assets (NPAs) worth ₹1,000 crore. “If the compensation offered is right, we intend to offload the NPAs,” he added.
At the EGM to be held on September 28, the bank’s shareholders would consider the ₹857 crore capital infusion by the government through preferential issue of equity.
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