Almost as if acceding to the Reserve Bank of India?s wishes, IDBI Bank plans to moderate credit growth and expand its deposit base. RM Malla, CMD, speaks to FE’s Kumud Das & Rohit Khanna unveiling his strategies achieve these obejectives. Excerpts:
Will IDBI Bank raise loan rates ?
We are looking to revise our loan rates upwards and the assets liability committee will meet soon. However, we are not looking to increase our deposit rates just now. Instead, we want to shed our high cost bulk deposits and have already done so to the extent of Rs 13-14,000 crore.
The RBI wants banks to go slow on credit growth. How would that impact your bank ?
We have revised our credit growth target at 10-12% for the current quarter and are looking at a 30% growth in deposits during the March 2011 quarter. Credit growth typically picks up in the last quarter of the year but we want to be slow when it comes to short-term lending this time. Instead, we would like to syndicate and downsell loans to improve our NIM and profitability. On the deposit front, our strategy will be to grow retail deposits by 30% and 10%, respectively, during the current quarter. We want to increase CASA to 20% within 3-4 months.
What has happened to your exposure to the aviation sector post restructuring?
Our exposure to the aviation sector was limited to Kingfisher only . However, the repayment has started happening post restructuring.
Like some of your peer banks, your bank’s incremental credit-deposit ratio has also exceeded 100%. How do you see the scenario?
Though our C-D ratio currently stands at 89%, it is more than 100% when we look at the ratio for past six months. Hence, we want to bring it down to normal level by raising more deposits. Moreover, we want to access the refinance window of institutions like National Housing Bank, Exim Bank and Nabard.
What is your capital raising plan overseas?
We have already raised $400 million so far and are looking at raising the remaining part of the $1.5 billion during the current quarter itself. So, we are planning to raise $ 1 billion by September-October. We are looking at various routes for our fund raising plans some of which may include MTN, syndicated loans or even ECA (export credit agency) backed loans.
Bank’s net NPAs have marginally increased…
The total slippage during the December 2010 quarter was at Rs 500 crore and most of it came from the restructured accounts. We are trying to reduce the slippage.