Public sector lender Allahabad Bank expects retail and small and medium enterprise (SME) segments to lead a revival in credit growth in the coming quarters. The Kolkata-based bank is hopeful that its loan disbursement will pick up to 10% by March next year after having reported a below-par 7% growth y-o-y in Q2FY14.
Also high on the agenda is bringing down a relatively high gross NPA ratio of above 5% by focussing on recovery and containing fresh slippages. The bank claims to have already strengthened its credit monitoring system.
Talking to FE, a senior Allahabad Bank official said the lender expected a revival in its credit growth going forward, as disbursement to retail, SME and priority sectors would likely pick up. “We are hopeful of clocking a 10% loan disbursement growth by March next year,” said the official, who wished not to be named.
In Q2FY14, the bank’s total credit increased to Rs 1,43,125 crore from Rs 1,33,866 crore in the year-ago period, a tepid y-o-y growth of 6.92%. Deposits, on the other hand, rose to Rs 1,85,297 crore from Rs 1,80,396 crore, a y-o-y growth of below 3%.
The official said the bank was not interested in increasing the deposit growth rate as of now, as there wasn’t much demand for credit. “We are not interested in garnering much deposits as we have to deploy those funds. Raising deposits is not an issue. Whenever we see a rise in demand for credit, the bank will take deposits from the market,” he said.
Allahabad Bank recently announced its decision to lower interest rates on deposits. It revised interest rates on domestic term deposits of different maturities below Rs1 crore for the period one year to less than five years from 9.05% to 8.90% with effect from November 10.
The bank, however, has no plan to sell bad loans to asset reconstruction companies right now.