The compounding amount will be hardly about Rs 160 crore, which we are going to get from the government.
LV Prabhakar, MD & CEO, Canara Bank
As of last week, Canara Bank had received requests for restructuring of loan accounts worth Rs 700-800 crore, of which it has accepted applications worth Rs 600 crore, LV Prabhakar, MD & CEO, told Shritama Bose. The lender expects a maximum of `13,500 crore worth of requests for the scheme, he added.Edited excerpts:
So far how many restructuring requests have you received and how are you dealing with them? We have internally assessed and as far as corporate and retail is concerned, we are expecting about Rs 13,000-13,500 crore on the higher side. But, as of now, the requests we have received are hardly worth Rs 700-800 crore. We have already invoked Rs 600 crore. In this, retail accounts are barely 20% and the rest is corporate.
What eligibility criteria are you following apart from what the central bank has laid down? There are only two criteria. One is that these people should have been affected by Covid. The second one is that this project should be viable going forward. The projected cash flows should be sufficient to take care of the installments.
How are you dealing with retail borrowers who may have lost their jobs or source of income and do not have an immediate plan for getting back on track? In my retail book, housing is about Rs 60,000 crore. Most of these borrowers are salaried people and very few of them have lost their jobs. We have the Canara Bank Covid scheme where we have already given some money to the people who required it. Then we have restructured it for whoever wanted it to be restructured and also given the moratorium. So we feel that over a period of time, there will not be much cause for worry as far as our bank is concerned.
Have you seen an improvement in the financial condition of borrowers who were given the moratorium? Moratorium is now history because all the installments have already been back-ended. Now the issue is whatever is the hold amount, which was not classified as NPA (non performing asset) but could otherwise have been NPA if this hold was not there. That amount, as per the balance sheet we had declared in June, was about Rs 10,300 crore, for which we have already made a provision of Rs 1,030 crore. Today, the same hold amount has come down to Rs 4,000 crore. That means that out of Rs 10,000 crore, Rs 6,000 crore has already been paid and those people have come out of hold. Because of the facilities that people are now getting, they want to address the problem rather than delaying the problem.
Your net interest income (NII) has grown 29% year-on-year (y-o-y). If we were to remove the impact of the moratorium and compounding of interest, would the growth have been lower? The compounding amount will be hardly about Rs 160 crore, which we are going to get from the government. Our retail book has grown at over 8%, housing has grown by over 13% and our total domestic loan book has grown 4.77%. This has contributed to our interest income. Another point is that my cost of deposit was 5.55% last September and now it is 4.75%. We could manage yield on advances at 8.02%. That is the reason why NII has grown 29%.
What is your outlook on credit growth? We will be growing our loan book by 6-8%. We are already seeing growth in housing. Agriculture and MSME (micro, small and medium enterprises) will drive growth. Corporates are again coming back to draw funds, and they will grow too, but growth will be driven by MSME, housing and then personal loans.