Pradeep talks to Shreya Roy about the innovative ways that the bank has adopted to tackles the problem of non performing assets. He also discusses the banks strategy of balancing global ambitions with financial inclusion.
How has 2010-11 been and how do you read the coming year
We have a target of Rs 2 lakh crore, from which we are not very far behind. In the next two years we should grow our loan book by 25% and deposits by 20-22%. Next year the total business growth will be around 25%.
How have interest rates movement impacted the bank
This year has been challenging particularly after September when interest rates started rising and our margins could get impacted. We were targeting a net interest margin of close to 3%, which may not be possible. But we will achieve around 2.5%, which is higher than last years margin. Liquidity is an issue, and we are not comfortable with the growth in deposits, particularly CASA.
Though we have increased the number of CASA accounts, maintaining the balance has been a challenge. Earlier, our average was at least Rs 25,000, which has come down. People are leaving smaller amounts in the savings account while the rest of the deposits are being converted into term deposits. We are now working on quality of deposits rather than on the quantity and this will be the focus.
The banks NPAs were up slightly in the December quarter...
We have been able to make a substantial recovery. Were displaying photographs of willful defaulters on our websites and in our branches and this has shown results. We do not want to adopt coercive methods, but we have no sympathy for wilful defaulters. We are committed to helping people repay, but wilful defaulters will not be dealt with casually. There was a delay on part of the bank in taking such steps, but now, we find our efforts are bearing good results, and total reduction in NPA this year will be substantial.
What are your network expansion plans for the coming years
We are planning to increase by 200 branches every year till 2015. This year, we have opened 106 branches on a single day and we are on track to adding 200 branches in the coming fiscal, which gives us a comfort level for mobilising CASA. These will be mostly in the tier II and III areas, where we see good business. For growth, we are focusing on states like Bihar, UP, Chattisgarh, which are now growing very rapidly.
You have long been seen as a regional bank. Do you see a shift in percetion
That is something that we are working on. While we have a pan India presence, which is going to widen rapidly, we also have international ambitions. We have approached the RBI for a licence for our first overseas branch in Hong Kong. Currently, we have two representative offices, in Dubai and Hong Kong. We are approaching opportunities in South Africa. Expansion outside of India is a clear focus are for us.
So what is the human capital addition you are looking at
Currently, we have 13,000-plus employees and with the expansion planned and retirements we will have to hire close to 800-900 people each year. We are recruiting through campuses and laterally because we dont have a training institution and have to outsource the training. We are now trying to acquire land in Bangalore to set up our own institute. The allotment has been made, transactions are taking place. Once that is done, we will have our own state-of-the-art training institute.
What are the steps that Corporation Bank is taking in the area of financial inclusion
Under our financial inclusion plans, we have covered 1,856 outlets and we are planning to reach 4,000 villages because this has been a major area of focus for us. Currently, we are opening a financial inclusion resource centre and heritage museum in Udupi, where we can showcase the work that has been done, not just by us but by the entire banking sector. We have also started doing a survey amongst the beneficiaries of financial inclusion to see what is the real benefit that people have got as a result of such programmes, and to see what is the change in their lives and in their approach to banking. It is a complete impact study.