Is being a mid-sized bank with a regional outlook a challenge
We were early users of technology but that became a problem for us because when the other new private sector banks started growing we lost some of our our senior staff. The challenge was to fill the gap and also compete for volumes. Our cost of deposits was slightly higher than of the nationalised banks but at the same we were not in a position to drastically increase our lending rates. What we did was to balance this and reduce the cost of deposits. Luckily, so far we have been able to maintain spreads and post profits year after year.
What is the banks immediate-term strategy for growth
Our immediate plan is to cross the Rs 50,000 crore mark next year and we should be able to do a business of Rs 52,000 crore by the end of 2012.
By 2016, we will be 100 years old and as part of our centenary celebrations, we have set ourselves an ambitious target of Rs 1. 25 lakh crore. We will open many more branches. The bank has in place a robust risk management system and adheres to the tenets of corporate governance.
What is the status of your fund-raising process
We are raising Rs 457 crore through a rights issue and net owned funds will cross Rs 2,000 crore as of March 31, 2011.The bank is also contemplating increasing the ceiling for investments by FIIs, NRIs and FDI from 24% to 35% and we have sought shareholders approval. We pay dividends regularly and since 2004, the bank has been declaring 100% or more.
Which regions do the bank cater to
We are broadbased with close to 43% business coming from Tamil Nadu, 17% from Andhra Pradesh, 17% from Maharashtra and around 8% from Gujarat. We are a regional bank with a pan-India presence and have been gradually spreading our network to the northern and western parts of the country. As of now we have 20 branches in Maharashtra, nine in Gujarat and 11 in Delhi. Each year, roughly 50% of new branches will be in Tamil Nadu and Andhra Pradesh and rest will be evenly spread across the northern and western regions.
How are your advances spread across sectors
Our strategy is not to have a single focus and we are evenly spread, with the maximum exposure to power sector. We have a similar exposure to textiles, infrastructure, leather and leather products, construction, petroleum, glass, cement and auto parts, among others.
What has been the banks experience with the base rate regime
The base rate is very good for the industry because it reduces unhealthy competition among borrowers. Alhough our lending has gone up considerably we cant say it was purely because of the introduction of the base rate regime. That might have been one of contributing factors to our growth.
Deposit rates have risen steeply. Have they peaked
In the short term, say for another six months, till such time the inflation comes down, but we feel interests rates will continue be on the higher side. But once the supply side constraints ease with regard to food and other commodities and inflation comes down, interest rates too will come down gradually.
That may happen in the second half of 2011. The government cannot afford to have high inflation since it directly impacts the poor. And high interest rates will impact production, so the government has to take a balanced view.