Gurdev Singh Vedi, who took charge as Punjab & Sind Bank's chairman and managing director last month, has a long list of things on agenda, starting with putting in place a core banking solution (CBS) that will also help the bank set up off-site automated teller machines (ATMs). In an interview, he tells Manojit Saha about the bank's plan for an initial public offering (IPO) next year. Excerpts:
What is on the top of your agenda for the bank?
The immediate goal is to become a Rs 100,000-crore bank. That is the first milestone we want to achieve as it will add more respectability to the bank. We hope to reach the milestone by March 2011. We are at Rs 65,000 crore now, and if we can grow at 30 per cent, the target can be achieved easily.
Are you planning an IPO or will you go for a private placement?
An IPO is very much on the bank's agenda. We can have an IPO during the next financial year. We are already thinking on those lines. Now, we can market ourselves as we have a good balance sheet for five successive years. With the restructured capital base, our book value and earnings per share have gone up. The financial parameters have also improved. Our gross non-performing asset (NPA) is one of the lowest in the industry. Return on asset is more than 1. Capital adequacy is also at a healthy level. Profits are also going up and we hope to cross the Rs 500-crore mark in the current financial year (last year it was Rs 437 crore). We follow a business model of growth with caution. There can be no compromise on the asset quality. Slippages are hardly there.
We can place the equity with a number of players who see value in the bank. The IPO will also provide an exit route for that. I hope to be able to divest 20 to 25 per cent stake.
When do you want to start the listing process and how much government stake will be diluted?
We can file the prospectus with the Securities and Exchange Board of India (Sebi) in April-May. We will dilute at least 20 per cent through the IPO. If the premium is good, than 20 per cent dilution will be sufficient.
So far, the growth in credit flow is the slowest in several years. What is your assessment of the situation?
Credit growth was not there till last month (August). But now, we can find signals of demand coming back. We are hopeful that the second half is going to be better.
Your benchmark prime lending rate (BPLR) is at 13.5 per cent, much higher than other public sector players. Do you see further scope to reduce it?
We are waiting for the report of the committee appointed by the Reserve Bank of India (RBI), which is expected to throw light on how BPLR should be calculated. We will look into it once the committee report comes in.
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There are worries over lending to the real estate sector. Do you share those concerns?
Though we are cautious while lending to the real estate sector, we are not worried about the prospect of the sector. All those companies in the sector to whom we have lent money are doing well. In addition, confidence is coming back to the sector due to rising demand. The sector is giving good returns too.
You are one of the few banks yet to adopt CBS.
Our CBS roll out got delayed due to the Satyam tangle. They were one of the vendors. But, now we are bringing in Wipro. Once they take up the assignment, it will take three months to roll out CBS. We have 915 branches and we are targeting 500 branches under CBS in the first phase. It will cover more than 85 per cent of the business. We can then target younger customers. With that facility, we will roll out off-site ATMs which we do not have at present.
Human resource must be a big worry since nearly 700 employees are going to retire over the next two years?
We are addressing the issue in two ways. One, we are promoting younger people. In addition, we are also going to recruit people with specialisation in areas such as treasury, foreign exchange management and chartered accountancy, where we do not have the required expertise.