Brajesh Kumar Singh assumed charge as Managing Director and Chief Executive of Canara Bank last week. In his first media interaction since taking over, Singh speaks to Narayanan V about his growth priorities for the bank, RBI’s decision to keep the repo rate unchanged and exposure to Rajesh Exports. Excerpts:
What are your priorities as the new MD & CEO of Canara Bank?
My first and foremost priority is on the resources front. We face some challenges in raising low-cost deposits, with our current account and savings account (CASA) ratio below 30%. We will focus on increasing deposits and resources, and my endeavour is to take the CASA ratio to at least 35%.
This is not guidance, but an endeavour. On the asset side, the focus will be on retail, agriculture and MSME (RAM) lending. That will help protect our net interest margin and improve our performance compared to the last few quarters. Our asset quality is already strong but we need to strengthen recovery efforts and keep credit costs under control. Over the longer term, technology and customer experience will also be key priorities.
Which areas will drive credit growth for the bank?
RAM will continue to be our key growth driver. Within that, in the retail segment, we are particularly strong in gold loans. We have the largest portfolio in the industry. Around 65% of our retail portfolio is mortgage-based. I want to focus on housing loans, loans against property and education loans. These products offer good earnings and long-term customer relationships, often lasting 30-40 years, allowing us to cross-sell and capture a larger share of the customer’s wallet. I would like to accelerate MSME advances further because the segment offers healthy returns, diversified risk and, in some cases, lower capital requirements.
Has the West Asia conflict affected your MSME portfolio?
As of now, there has been no significant impact. However, demand for credit support is expected, which is why the government has introduced the Emergency Credit Line Scheme. We have over ₹20,000 crore of eligible lending under the scheme. We have already informed all eligible customers and started the process. While not everyone requires the facility, those who do have begun availing of it.
How do you view the RBI’s decision to keep the repo rate unchanged at 5.25%?
I see it as beneficial. Stability in interest rates has its advantages. Since there has been no rate change, our deposits are not being repriced. If rates were cut, nearly 50% of our advances, which are linked to the repo rate, would be repriced overnight. So, stability works in our favour.
There are reports about Canara Bank’s exposure to Rajesh Exports. How significant is it?
Canara Bank’s residual exposure to Rajesh Exports is minimal compared to the total credit facilities extended. The exposure has been fully provided for and remains recoverable. The residual exposure is not expected to have any material impact on the bank’s balance sheet or overall financial position.