You had to create a deferred tax liability of Rs 272 crore this quarter. Can you throw some light on this
This is something that was allowed to be dealt with at the reserve level till now and was not going to profit and loss. It is a liability that is likely to arise in the future and that is why, till now, it was not required in the current profit and loss account. But RBI has prescribed that we deal with it in the current year's profit and loss account. There was a carry forward component till March 2013, which was allowed to be dealt with the reserves. The accumulated amount for the first three quarters this year is R272 crore, which we have provided now. Going forward, we expect about R70-75 crore per quarter.
What will be your growth philosophy this year You have also made a number of recruitments and are planning to increase the branch network. Will your focus be on improving market share or defending the current share
If there has to be a trade-off between growth and profitability, we will certainly favour profitability. We will grow about 2-3% higher than the industry. So, if the industry is growing at around 15-16%, then a 18-19% growth for us would be a given. We have hired about 6,300 employees so far and the plan is to open at least 625 branches this year. While the aspiration is to improve the market share, the important point is to defend the current share. To defend the share, you cannot lag others in your industry. Essentially, the growth will have both elements of defending as well expanding the market share.
Which sectors do you think you will not lend to You have been trying to rebalance your books, by giving prominence to retail and small and medium enterprises (SME). Where has that reached and how do you plan on taking it forward
Overall, a bank of our size cannot say that we will completely abstain from any segment. Between all segments, the growth rates might be slightly more for retail and SME. But, in absolute terms, we must realise that the base is different for our medium and large corporate portfolio and the retail portfolio. It takes about 3-4 before you rebalance a portfolio. We are living in a dynamic world. So, while today we are talking about rebalancing, next year the ground realities may change. It is an evolving situation, but, as of now, this is the reality. So, if other things remain the same, next year while preparing our plan if we see that our corporate credit should grow by 20%, then our retail and SME portfolio should grow by 23-24%.
Your slippages have gone down every quarter this year. How did you manage that How long do you think it will take before the asset quality issues are resolved
In the initial phase of NPA formation, rate of recovery can never be higher than the slippage. Which is why for some time the ratio keeps on increasing. The reduction of NPAs starts becoming stronger when you have completed one or two years and when not only recovery, but also the upgradation starts. Upgradation is the only element that can match the slippage. We have so far been in the phase of formation and, I think, we will soon be entering the phase of reversal, or that of upgradation. Then, the reduction will really start. In the current quarter, NPA reduction is because of recovery and upgradation. And, not because of write-offs or sale of bad assets. This year, we may assess the possibility of selling some bad loans.