Rajiv Kishore Dubey, who took over as Chairman and Managing Director of Canara Bank in January last year, is keen on expanding the bank’s footprint.
The bank’s branch network has expanded enormously in the past year and its fundamentals have improved. In an interview to Business Line , Dubey said the bank’s total business will touch ₹10-lakh crore in two-three years and profits will swell to ₹10,000 crore. Excerpts:
Rather, we are on a development spree. We are fast increasing our footprint across the country. More branches, more ATMs, more business, more customers, more services in cities, semi-urban areas and villages.
We have opened a branch in Johannesburg in South Africa too. We will open one in New York soon. In India’s banking history, no other bank could open 1,027 branches in just one year.
More branches will mean a sharp increase in the operating costs.
More branches will also mean more business and more income.
Does the current sluggish growth of the economy justify such feverish branch expansion?
Bank branches bring money into the economy. Dormant, unutilised money is mobilised as deposits, thus bringing it into the banking system.
This money is pumped back as loans into the productive sectors in the rural and semi-urban areas, thus increasing economic activities. SMEs (small and medium enterprises), retailing and housing sectors get new infusion of credit and their growth is accelerated.
What are Canara Bank’s current focus areas?
We are focusing on retail loans, rather than on long-term corporate loans. Loans to retailers, farmers, MSMEs; loans for housing, education and vehicles. We used to have a high — as high as 50 per cent — exposure to corporates.
Now we are reducing this and increasing lending to the retail sector. We are also increasing our lending to students and for this we are going to have tie ups with professional education institutions.
However, this doesn’t mean that we wouldn’t lend to corporates. Only, we will be very selective as we want to keep our NPAs (non-performing assets, or bad loans) at a low level.
We will also give money to infrastructure projects such as the Kochi Metro. Without going for a consortium of banks, we are giving ₹1,100 crore to the Kochi Metro.
We want to be associated with the Kannur airport project in Kerala (both the metro and airport projects are on the PPP mode).
Could you spell out some of your priorities?
We want to improve the bank’s asset quality. Our NPA levels are already low when compared with many peers (the net NPA ratio in the last quarter of 2013-14 was 1.98 per cent). But we want to bring them down further.
Recovery rate should go further up, though currently our cash recovery rate is among the highest in the industry. We also want to improve productivity per person and per branch. The brand identity needs to be refurbished.
The NRI portfolio also needs to be expanded. We also want to vastly increase our non-interest income — such as fee income and income from life and health insurance (core fee income increased by 32 per cent in 2013-14 over the previous year).
The CASA ratio (currently 25.9 per cent) will be increased. We are also upgrading our technologies to make banking easier and simpler.
In the next two-three years, what do you want your bank to achieve?
Jack up total business to ₹10-lakh crore (at the end of March 2014 it stood at ₹7.22-lakh crore), step up profits to ₹10,000 crore, increase the number of customers to 10 crore, and expand the branch network to 10,000.
How do you see interest rates moving?
The rates are likely to come down after the second quarter this fiscal if the Government is able to contain inflation.
What’s your outlook on the economy?
I believe the economy is going to begin recovery in the next three months as there is a general positive atmosphere in the country. Since the new Government is most likely to take decisions quickly and clear most of the pending projects shortly, these will make a positive impact on the economy.
The overall sentiment was negative in the past few years and decision-making, particularly on pending projects, was tardy.
One reason for the high bad debt burden in the banking industry is due to the non-clearance of so many projects.
This is definitely going to change and the banking industry will look up.