J&K Bank will continue to prioritise retail lending in FY27 and will raise Rs 1250 crore of capital. MD and CEO Amitava Chatterjee tells Kshipra Petkar, deposits could grow by 10% and loans by 12%. Excerpts:
Will the bank continue to focus on retail?
Our strength is retail, and that will continue. Retail gives us better returns and stability, so the focus remains unchanged for FY27.
Corporate advances form a small portion of your book. Are you seeing a demand pick-up?
At the moment, we have a corporate pipeline of Rs 4,000–5,000 crore, which is enough to meet our annual growth targets. We are selective and largely lend to AAA-rated private corporates and AA to AAA-rated public sector entities. We have sanctioned limits to entities such as SAIL, NTPC and some highly rated non-bank finance companies.
What is your loan and deposit growth guidance, especially given geopolitical uncertainties?
We have guided for 10% deposit growth and 12% advance growth, similar to last year. The guidance is conservative and factors in global uncertainties.
What is your margin guidance for FY27?
Net interest margins were 3.60% this year. We aim to maintain them in the 3.5%–3.6% range.
Could geopolitical tensions have indirect impacts on specific segments?
There could be some impact on small petrochemical units in Jammu division due to higher input costs. However, our exposure there is limited, so we do not foresee material stress.
Do you plan to make any special provisions due to global risks?
We have not felt the need for any special or one-time provisions related to current global conflicts. We are comfortably placed, having reported profits for five consecutive years. If required, we will reassess.
What is the estimated impact of the new expected credit loss (ECL) norms?
The impact, by a rough estimate is about Rs 1,700 crore over five years but it could be lower by nearly Rs 300 crore.
What are your capital-raising plans for FY27?
The board has approved raising Rs 1,250 crore, over the next two quarters through a mix of Tier 2 bonds and equity.
The bank reported 25 fresh fraud cases amounting to about Rs 170 crore. What is the nature of these cases?
The frauds involve issues like fake collateral or diversion of funds. There are no major cyber-related frauds requiring provisioning. We have strengthened monitoring systems and internal controls significantly. We also have independent assessment of the branches done by agencies within the bank but not directly related to the business.
What steps have you taken regarding emerging AI and cybersecurity threats?
We are reviewing internal vulnerabilities and strengthening oversight of external integrations. We have asked all the vendors with whom we are integrated to take measures and get it certified by us.
Deposit mobilisation remains a challenge across banks. Do you see structural changes in banking?
Household savings are increasingly moving to mutual funds and other instruments. Over time, banks will need new instruments and possibly regulatory or tax support to raise funds efficiently.