‘We plan to become leading pan-India bank with stable growth'

Corporation Bank, which is planning to expanding network in the country, is also looking at increasing its presence overseas.

Despite the current economic scenario, the bank is looking at increasing its presence in areas such as SME, commercial vehicle loans, and gold loans to boost its credit growth.

In an interview with Business Line , Mr Ajai Kumar, Chairman and Managing Director of Corporation Bank , discusses all these issues.

Excerpts from the interview:

In one of the previous interactions you had mentioned about taking the bank to the next level. What plans do you have in this regard?

The bank is one of the oldest in the country, established in 1906. We have a long history and a legacy as well.

For a pretty long period of our existence, we had restricted focus and did not expand in all parts of the country.

We have now been growing. We hope to continue the same in the near future. We are also expanding our footprints in areas where we were not present.

We plan to become a leading pan-India bank by having a consistent and stable growth, without losing sight of the profitability parameters for which Corporation Bank is recognised across industry.

Can you please explain your branch expansion plans?

Our plan is to open 200 branches a year. We will be finishing our target of 200 branches for this year.

We want to open another 200 branches in the next fiscal.

What about manpower requirement for this expansion?

We have compulsions of manpower. We had appointed 1,000-odd probationary officers before the IBPS process started.

Out of which, some had joined. Others are yet to join. We will be having huge requirements. Actual numbers are being worked out.

Can you throw some light on your overseas expansion plans?

We have two representative offices in Hong Kong and Dubai. They are doing well. We want to convert Hong Kong as the branch.

The reason for this is because it is the business hub for the entire world.

Earlier, it was only for South-East Asia. Money from China is routed through Hong Kong. Now, our representative office has to pass on the business to other banks.

And we want to have better presence in Dubai. We want to have a branch in Dubai International Financial Centre. We will seek the RBI approval for both these branches.

Other countries I would like to have presence are Bangladesh and Nepal. At a later stage, even Africa. I am bullish on Africa.

That is a virgin territory. That is the next outpost for big growth.

How do you see the current economic scenario? What measures has the bank taken to tackle the scenario?

The growth of Indian economy has slowed down from the previous level. The reason for the same could be attributed to the prevailing economic turmoil in the western countries, high oil prices, inflation, increase in the interest rates and a host of other factors such as fall in rupee and decreasing exports etc.

The high interest rates coupled with the slowing growth numbers has also affected the credit offtake of banks.

In this scenario, the Government also lowered the GDP growth projection toaround 7.5 per cent .

Even though the overall economic scenario affected the credit growth of our bank, Corporation Bank has done reasonably well in the credit front, on a year-on-year basis, which stood at around 29 per cent.

How did you achieve that growth?

Though proposals are not coming for big loans, credit growth is coming from retail and SME segments. We are giving focused attention on SME lending.

We want to reach a figure of Rs 15,500 crore in SME lending this fiscal. We want to consolidate our growth with a more stable business environment.

This can happen when only interest rates soften.

There are huge demands and opportunities from sectors such as infrastructure, retail, housing etc.

The bank shall cash in on this opportunity to achieve a qualitative credit growth at the desired level. We also want to focus on commercial vehicle financing and gold loans.

Further, due to favourable monsoon this year, the bank expects an increased demand from agriculture sector.

Recently, most banks have been increasing NRE rates. How is the response for this in your bank?

Branches are upbeat on the changed scenario and are receiving positive responses from their clients. We hope to mobilise substantial deposits in NRE term segment.

What plans do you have for SB rate? Are you going to increase it further?

In the present interest rate scenario, where the cost of funds has been increasing, it would be prudent to wait for the interest rate cycle to soften. Our bank will take appropriate decision at the right time, depending on our own funds and asset-liability requirements.

What are you expecting from the RBI's review of monetary policy on January 24?

The RBI has given quite positive indication in the last mid-quarter review by indicating a halt in interest rate increases.

Along with this, the RBI has brought growth as its focus area which has given a boost to the market sentiments.

The inflation is experiencing some softening in the last couple of releases.

The food inflation has turned negative.

This augurs well for the economy as far as inflationary pressures are concerned.

But, we cannot lose sight of the increasing oil prices and prices of other commodities which put pressure on the WPI.

While it is true that the RBI may take the decreasing inflation numbers into account while deciding on the rate change, the fact that food inflation has a weight of 14 per cent leaves the other 86 per cent quite important and to be watched.

The RBI may take a cue from the monthly inflation numbers before taking a call on the interest rates.

>vinayakaj@thehindu.co.in

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