Kolkata-based UCO Bank is undergoing a major revamp to expand its business. Arun Kaul, CMD, UCO Bank speaks to FE’s Kumud Das charting out his action plans on increasing CASA, HR recast and NPA management. Excerpts:

How do you plan to improve the performance of the bank?

We have three major challenges. The first being that the current account and savings account (CASA) is relatively low. Moreover, the quality of assets is not up to the mark and apart from this we need to also address some HR issues. UCO Bank’s CASA is at 24-25% as a percentage of total deposits. It’s lower than other banks because UCO Bank has been slow in acquiring customers. The customer base is just at 1.20 crore to 1.30 crore. We are putting in efforts to improve service and are acquiring customers at the rate of 2 lakh customers per month.

Interestingly, 50% of them are savings bank account holders. The average age of employees is high at 52-53 years and so is the attrition rate, which we plan to address.

What are your projections for the bank ?

Our bank?s deposits are growing at 19.7% and credit growth is at 21.84%. Our market share of deposits is at 2.21% and that of credit is at 2.23%. The total business of UCO Bank was at Rs 2 lakh crore as on March 2010 and we want to grow this to Rs 2.45 lakh crore by March 2011. We plan to achieve credit growth of 31% and deposit growth of 21%.

Why did you defer your FPO plan despite having received government clearance?

After having received a capital infusion to the tune of Rs 673 crore from the government in the form of perpetuated non-cumulative preference shares (PNCPS) earlier this year, we don’t need to raise capital. Our capital adequacy ratio is at 13.6%. The tier-I capital is at 7.82% while tier-II capital is at 5.78%.

Where do you see bank’s NIM this year?

Our NIM at the end of September 2010 quarter was 3.51% compared to the 1.91 % for the March 2010 quarter. The increase in NIM is due to repricing of the deposits. Going forward, there could be a little bit pressure on NIM because for certain tenures, yields have moved up but we will be able to end the year at an NIM of 3% plus.

How will you reduce NPAs?

We have a two-pronged strategy for this. We will address slippages and also strengthen the recovery process. In the last six months, slippages have reduced to Rs 1,100 crore. While gross NPAs have come down to 2.39%, net NPAs have dropped to 1.18%.

How many branches do you plan to open?

We plan to open around 800 branches in the next two years. Currently, we have 548 ATMs and we would be setting up 1,000 ATMs in next one year.