CanBank takes up Rs 200cr core banking project

To cover 1,000 branches under core banking solution by mid 2006

Canara Bank will be investing Rs 200 crore in bringing 1,000 of its total 2,520 branches across the country under the core banking project by the middle of 2006. While IBM will be the service provider, i-flex will provide the software.

The bank is also looking at setting up a representative office in the UAE shortly besides converting its existing representative offices in Hong Kong and China into branches.

Speaking to mediapersons on the sidelines of a two-day 'International Conference on Business and Finance - 2005' in Hyderabad, being organised by ICFAI University in association with Philadelphia University, Canara Bank chairman and managing director M B N Rao said, "We are taking up a Rs 200-crore project in which 1,000 branches that bring in 80 per cent of our business will be covered under the core banking solution by the middle of 2006. This will involve 17 software packages to enable know-your-customer norms, internet banking, anti-money laundering etc."

With regard to Basel-II norms, Rao said, "Even after taking into consideration the credit risk, market risk and operational risk, Canara Bank will have a capital adequacy ratio of more than nine per cent."

He added that they also had the option to raise funds from the public in the next financial year, though there were no fixed plans regarding it as yet. Canara Bank also has an investment fluctuation reserve of Rs 1,200 crore, which can add to the tier-II capital, he said.

Meanwhile, delivering the keynote address at the conference, Rao said that the economy could grow by 10 per cent a year in the next two-three years.

"The economy is likely to grow at 7.5 per cent in FY06 with growth impulses emanating from various segments. Prime Minister Manmohan Singh has said that a 10 per cent growth over the medium-term is feasible with increased savings rate, growth in agricultural output and infrastructural expansion," he added.

Rao also said that with 60 per cent of banks' total outstanding advances above Rs 2 lakh in 2004-05 being at rates below prime lending rates, besides intensifying competition in the retail banking segment, banks now need to increasingly look at small and medium enterprises as a growth option.