Slowdown likely to hit banks’ profitability, says Canara Bank CMD

Banks’ profitability may come under further pressure in the current financial year as investments slow, bad loans grow and borrowers take more time to repay loans, according to R. K. Dubey, Chairman and Managing Director, Canara Bank.

Banks’ opportunities to lend, he said, have come down with slow down in investments and themanufacturing sector stagnating. This leaves only the agriculture, retail and education sectors for the banking industry to lend to. All banks are trying to focus on these sectors. If banks try too hard to lend, then delinquencies will certainly grow.

Besides, there are a lot of provisions to be made as per the new RBI guidelines. “So, as I read the situation now, I expect that our bottomline would come under further pressure this year. However, we in Canara Bank would try to match our last year’s performance, at best,” Dubey said.

Talking to Business Line on the sidelines of a financial conclave held recently in the city, he said Canara Bank has a strong presence in the education loan segment in Tamil Nadu and Kerala. “We now want to grow our business in other geographies. We are also focusing on the agriculture and retail sectors.”

On RBI’s recent measures to stem the rupee fall, he said the resultant liquidity crunch is only short-term and meant to correct the current imbalance.

The entire global economy is in turmoil. When volatility hits the market, it necessitates certain tough measures. “I hope, all these measures will be moderated in the forthcoming monetary policy, and the situation would stabilise,” he said.

> ravikumar.r@thehindu.co.in

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