Making a turnaround after a difficult patch in the last few years, Dhanlaxmi Bank — one of Kerala’s oldest private sector banks — is now eyeing 15 per cent growth in business. In an interview to BusinessLine , Managing Director and CEO, G Sreeram, said he is bullish about sustaining this growth momentum given the encouraging first quarter performance. Excerpts:

Do you have plans to raise more capital?

Right now, there is no such plan. The RBI-stipulated CRAR was 10.25 per cent as on March 31 and the bank has reached 10.26 per cent.

After infusing ₹120 crore fresh capital on May 15, the CRAR has gone above 12 per cent which supports both advances and risk-weighted assets by sustaining a growth rate of 15-20 per cent in FY18.

However, the bank will go with minimum growth rate of 15 per cent in credit and above 10 per cent in deposits.

What is your current credit-deposit growth?

The industry level slow pace in credit growth affected our bank also. Considering the regulatory requirement on capital adequacy, the bank in FY17 concentrated on low-risk advances.

Further, the bank took a conscious approach for collateral-based lending to improve the asset quality. At the same time, we continued lending to the micro credit agriculture and SME segments.

With the infusion of ₹120 crore, the bank can expand its credit base in FY18. Retail advances, including agriculture and micro credit, and lending against gold are the thrust areas for the current year.

During the period, the bank concentrated on low-cost deposits. In FY17, CASA (current account, savings account) deposits increased by ₹483 crore to ₹3,325 crore, registering a growth of 17 per cent.

On the deposit side, the thrust areas for FY18 are new current and savings bank deposits, expand the NRI base and deepening of existing relationships.

Do you foresee any problems in NPA recovery or any plans for the sale of distressed assets?

Regarding NPAs, the bank is expecting a very good recovery in the first half of FY18. The bank has recovered a good number of NPA accounts in the first quarter itself. Right now, there is no plan to sell distressed assets to ARCs (asset reconstruction companies). The gross NPA ratio as on March 31 s improved to 4.78 per cent from 6.36 per cent and the net NPA ratio to 2.58 per cent from 2.78 per cent a year ago. The provision-coverage ratio was 79.99 per cent.

The entire monitoring and recovery force has been revamped and the team is constantly in the field to recover maximum NPAs and to avoid further slippage.

At present, the NPA level is fully collateralised and manageable within the recovery system and no plan for ARC sale is under consideration. Whenever this route is considered, the same also will be based on cost-benefit analysis of the proposal.

Is there any reason for the recent run-up in the bank’s share price?

Investors are now showing more interest and comfort in the growth of the bank and its way of functioning.

Labour trouble is a major problem faced by the bank. Has the issue been settled?

Industrial relations are very cordial now and the workforce is cooperating for the growth, survival and sustainability of the bank.

Is there a future for the bank as a standalone entity or will it go for a merger to form a bigger and stronger bank?

There is no question of merger or strategic alliance with any bank or any other institutions.

Altogether, 48 per cent of the shareholding is by Keralites who have an interest in the revival of the bank.

Is there a fear that some NRIs are cornering the shares?

NRIs’ permitted equity holding is 24 per cent as per RBI guidelines, and as on date, 21 per cent equity in the bank is held by NRI entrepreneurs.

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