Indian Overseas Bank Chairman & Managing Director M Narendra says the issue of rising non-performing assets will be addressed as the economy starts recovering, hopefully in the next few months. Excerpts from an interview with Vrishti Beniwal:
Asset quality of banks is deteriorating. What is your sense how serious is the problem?
Asset quality deteriorating is actually a temporary phase of difficulty. When certain sectors are having problems banks may be having slightly higher NPAs. When the economy comes back on track sectors having problems will also recover. It all depends on the global scenario plus domestic scenario. Some sectors may recover within six months some may take higher. But once the recovery takes places most of the accounts will come for upgrade. It is cyclical as when the market is good things will go up.
Is the worst behind us or the quality may deteriorate further?
It is difficult to tell. If the economy is going to improve definitely the worst is behind us. The economy may recover in six months.
Are you going to see more of corporate debt restructuring going ahead?
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There was a time when there were no CDRs at all. CDR is done on a viable basis and where there is a proper management commitment. It's a tool through which you can give some time to the company.
Are you going to revise your credit and deposit growth targets for this year?
It is in line with the Reserve Bank's projection of 16% credit growth and deposit may be around 18%.
What are your capital raising plans for this year?
We are looking at some capital support from the government. We have asked for roughly Rs 1,500 crore. At the moment we don't need capital as per Basel II. But now we are having a system that tier I should be 8%. In the next six months we will see how are profits are going.