Canara Bank To Foray Into China Via HK Arm

Mumbai, December 23: | Updated: Dec 24 2002, 05:30am hrs
The Bangalore-based Canara Bank is planning to make foray into the fastest growing economy in the world China through a Hong Kong subsidiary. Unlike its Russian foray, wherein it plans to form a joint venture with the State Bank of India (SBI), the bank wants to do it on its own, said the banks CMD, RV Shastri.

We are planning to expand our operations into China. The bank has a deposit taking company (DTC), as it is called there, in Hong Kong. Through that, we are exploring the possibility of expanding operations in China, Mr Shastri told FE after ringing the gong at The Stock Exchange, Mumbai (BSE) to mark the listing of its shares on Monday.

There are many banks looking at opportunities for expanding their operations in China. But there is no schedule set for completing the process (of setting up operations in China), Mr Shastri said.

On the Russian subsidiary, which is a 60:40 JV with SBI, Mr Shastri said: All formalities are over. We are only waiting for the nod of the Russian government. We are planning to invest $20 million (about Rs 96 crore) to start with. SBI will put in $12 million and Canara Bank $8 million.

Canara Bank has a branch in London too.

Mr Shastri also said the banks net non-performing assets (NPAs) were set to come down further, even though they were already low at 3.84 per cent as on September 30. The figure has come down from 3.89 per cent from end-March.

After the stock was listed at Rs 43 per share against the issue price of Rs 35 per share, he said: Our pricing is vindicated. In retrospect, I feel that we priced the stock appropriately for the issue.

Our greatest strength is low NPAs at 3.84 per cent and their coverage through provisions up to 63 per cent, one of the highest in the industry, he added.

The bank has issued notices under the Securitiesation and Reconstruction (S&R) Ordinance to 480 borrowers for total unpaid dues of over Rs 300 crore. The bank has initiated action by taking possession of assets of small value.

It is planning to develop own infrastructure for effecting takeover of assets against dues. We are planning to have at least one unit of skilled people each in 13 of our circle offices and two regional offices in a month. Eventually, the figure may go up to 25 units. The so-called specialists have expertise only in taking possession of immovable properties, Mr Shastri added.

Many of the borrowers against whom notices were issued were coming with proposals for restructuting or one-time settlements. We have recovered about Rs 279 crore during the first half of the year from the accounts identified as NPAs and are expecting to recover Rs 250 crore from these accounts during the remaining part of the year, Mr Shastri said.