Canara, Bank of Baroda among top performing public sector banks

Canara Bank and Bank of Baroda chairmen MBN Rao and Anil Khandelwal are set to be among the top performers in 2006-07. Though the final report card for public sector banks is yet to be out, it is understood that these two banks have managed to improve their financial position significantly in 2006-07, despite tough conditions.

It may be noted that the government would decide on incentives based on the performances of the bank chairmen.

Among the mid-sized banks, Oriental Bank of Commerce has managed to show an impressive growth.

However, it is understood that the government is satisfied with the performance of all public sector banks. ?Most banks have managed to achieve the set targets,? a banking industry source said.

Among others, Central Bank of India is likely to be placed at a lower rank in terms of performance, though it is learnt that the government is more or less satisfied with its financial results as well.

The net profit of Canara Bank stood at Rs 1421 crore during the end of 2006-07 up from Rs 1,343 crore in the previous year.

The bank also managed to bring down its net non-performing asset level to less than 1%. Bank of Baroda, on the other hand, saw a 24% increase in its net profit at Rs 1,026 crore in 2006-07.

The total income of the bank during the year was up by 27% to Rs 10,385.88 crore. The net interest income for the bank has grown to Rs 3,786.08 crore in 2006-07 from Rs 3,174.86 crore a year ago, a growth of 19.25%.

As per the guidelines on the newly initiated performance-based incentive scheme, 85% weightage will be given to quantitative parameters like core deposit growth, advance growth, agriculture and SME advances, return on asset, cost-income ratio, gross profit and gross reduction in non-performing assets among others.

In case a bank is able to achieve 95% of the set target, the incentive will be Rs 8 lakh while 81% achievement of the target would translate into Rs 7 lakh and 61% would mean Rs 6 lakh. The move is to increase the pay scale of the bank chairmen and bring them on par with their counterparts in the private sector.