If cost of funds comes down, we will pass on benefit to borrowers: Chanda Kochhar, MD & CEO, ICICI Bank

Mumbai | Updated: Oct 31 2014, 06:03am hrs
ICICI Bank reported a 15% growth in profit in Q2FY15, but the increase in corporate credit at 5% y-o-y, has been even weaker than the 7.7% it had reported in Q1. In an interaction with reporters, MD and CEO,

Chanda Kochhar, said the lender expects some improvement in corporate lending, as and when the economy recovers. Excerpts.

What is your outlook on credit growth and bad loans

Our domestic portfolio grew 15%, mainly driven by secured retail loans and our credit outlook, going forward, remains the same. We expect to grow between 2-4% higher than the industry average and expect our retail portfolio growth to continue to be in excess of 20% for the year.

We had gross additions to NPAs of R1,693 crore but, of that, R800 crore was on account of slippages from restructured assets. So, the fresh additions were less than

R900 crore. The addition to the restructured portfolio is also

R900 crore, but the portfolio hasn't grown as there were some upgrades and some downgrades, too.

Currently, our restructuring pipeline is about R1,800 crore, but if you could recall at the beginning of Q2, we had said that our restructuring pipeline is about R1,600 crore. Since we have restructured only

R900 crore during the quarter, some accounts from that pipeline that did not get restructured during the last quarter are being counted in the fresh pipeline.

What kind of reduction are you seeing in your cost of funds Do you expect the cost to come down further

We have seen a 3-4-bps reduction in our cost of funds in one quarter. I think it is possible that this trend would continue and some amount of reduction would take place. If reduction takes place, banks would transfer it to borrowers.

Do you see improvements in corporate loan growth

Currently, the demand is mainly for working capital and not for capex. I do think that improvement will take place but how long it will take depends on the recovery in economic growth.

The bank has raised R3,900 crore through infra bonds recently. However, you said there is

hardly any demand in

infrastructure projects. So, is it being utilised

If you look at the Reserve Bank of India (RBI) guidelines, a percentage of your existing eligible assets itself qualify for raising infra bonds. We have been a very large player in infrastructure and affordable housing, so we have a large portfolio that becomes eligible. In retail disbursements, there are affordable housing disbursements that are taking place as well and the affordable housing portfolio has since increased.

The government has taken some recent measures on coal block allocation. Do you see an improvement in your asset quality as a result

The positive part is that the onus is on the government with regard to the reallocation of the mines through e-auctioning. I think a lot of progress has been made in really thinking through the re-auction and the e-auction process. So, I'm quite hopeful that a solution would be found as per the timelines indicated.

It is really going to be a much larger improvement for the system because even though some of these are only mining entities, they do have an impact on the associated power projects or on production of iron and steel. As the mines start operating and the forward linkage projects start, it gives a great boost to the economic growth, which is definitely positive for everyone.