Dena Bank, like all other banks, has had a dream-run on the deposits front during the 50 days following demonetisation. Copious deposit inflows in the form of scrapped high-denomination notes helped the bank shed bulk deposits amounting to about ₹9,000 crore, according to Chairman and Managing Director Ashwani Kumar. On the loans front, however, the picture is not so rosy, with the public sector bank turning cautious in the background of tepid demand. In an interview with BusinessLine , Kumar said his bank is pinning its hopes on loan growth to the retail, agriculture and micro, small and medium segments. Excerpts from the interview:

How much deposits did your bank mop up during the demonetisation period?

Roughly, we have collected about ₹20,500 crore in the form of specified bank notes (SBNs) up to December 30. Of this, withdrawals have been about ₹7,500 crore. So, net accretion is about ₹13,000 crore, mainly in savings bank and current accounts.

So, we got an opportunity to shed whatever bulk deposits we had. Before demonetisation we had bulk deposits amounting to about ₹9,000 crore, but after demonetisation we are left with about ₹900 crore of these deposits. Hence, our deposit growth has not been much.

Current account, savings account (CASA) grew from ₹32,000 crore to ₹45,000 crore during the demonetisation period. CASA increased from 29 per cent of total deposits in December 2015 to 38 per cent in December 2016.

We have had a dream-run on the CASA front. Now, let us see how it stabilises once the government allows full withdrawal. But I don’t think there is any pressure as such for withdrawals.

I don’t think there will be major outflow now. People may gradually either convert their deposits into term deposits or withdraw the deposits. CASA may drop by 2-3 per cent at the most.

During the demonetisation period, the recovery (in the form of asset upgrade) was about 20-25 per cent higher than in the year-ago period. Those who had SBNs would have paid off the loans. Amount-wise it was not significant, maybe ₹60-70 crore.

In the wake of demonetisation and the government’s digital push, what initiatives have your bank taken?

During the 50-day demonetisation period, we enrolled about 4,000 merchants for installing POS terminals and actually installed about 2,000 terminals. By March-end 2017, we will put 10,000 POS machines in place. Wherever possible, we are giving POS terminals for cash disbursals. We did this especially during the demonetisation period at places, such as hospitals and residential societies.

Our pre-paid cards are ready and 30,000 have been supplied to the zones. These re-loadable cards are useful for those who are getting salary in cash. We now have mobile banking products such as the Unified Payments Interface (UPI), “99# service’, mobile banking, tab banking, etc. Our e-wallet has already been launched in association with Jio.

The only challenge that remains is that we are just switching over from our current system integrator Wipro to HP. This is the first time in the banking industry that such a transition is happening.

Out of 1,509 ATMs, more than 1,400 have been re-calibrated (to dispense the new ₹2,000 and ₹500 bank notes). Pre-demonetisation, our per day per ATM hit was 57-58, but post-demonetisation it has jumped to 110-120.

What steps did your bank take to alleviate the cash crunch facing people during the demonetisation period?

During the initial period of demonetisation some banks were restricting transactions to their own customers. But we did not place any restrictions across India and ensured that as far as possible the ATMs were loaded so that our own customers as well as other bank customers could withdraw money.

This ensured that citizens were not inconvenienced. It was a very good time to gain goodwill. The intention was that people should know Dena Bank as the bank that helped them during the crisis.During the demonetisation period, we loaded 24 ATMs on to trucks and took them to various places to help the public with cash withdrawals. This gesture was appreciated.

What is your position on loan growth?

There was no growth in advances. In fact, year-on-year, our advances shrunk by about ₹3,000 crore to about ₹77,000 crore as at December-end 2016.

Credit growth has not been there mainly because we received repayments from non-banking finance companies (NBFCs) and we have not been aggressive in lending to them in December 2016.

Lending by NBFCs also took a beating during this period as normally their lending is to small borrowers. So, we were not very aggressive in disbursals to them and they were also not very demanding.

On the vehicle loans front, we started a campaign beginning August 10. So far, we disbursed about 11,400 vehicle loans amounting to about ₹330 crore (up to January 9) despite the pressure of demonetisation.

The housing loan campaign we launched from October 1. We have disbursed loans to 1,100 accounts amounting to ₹150 crore.

Our thrust remains on recovery (of bad loans), retail, agriculture, and MSME. In the last two months (rabi season), our disbursals to the agriculture segment, at about ₹440 crore, was okay. Now, MSME loan demand should start picking up as cash is coming into the market and digital outreach is also expanding.

We are not seeing any demand coming in from large corporates right now. One of the reasons is that all ‘AAA’ and ‘AA’ rated corporates till now were able to raise funds from the market via commercial papers, bonds, etc.

Slowly, demand is coming for expansion. But I think that it will take one or two quarters more for us to see actual demand once the effect of demonetisation wears off.

There is demand from the roads, solar, and power segments. There is more demand for refinancing than fresh loans.

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