| What kind of growth you see in 2007-08? |
| We expect both top line and bottom line to grow 22-25 per cent in 2007-08. The return on assets may further improve to 0.95 per cent from 0.76 per cent in 2006-07. The bank's net profit rose to Rs 272 crore in 2006-07 compared with Rs 51 crore in 2005-06. |
| CASA (current account and savings account) deposits constitute 43.5 per cent of total deposits of Rs 33,990 crore. Our total deposits are likely to increase 24 per cent to Rs 41,000 crore by March 31, 2008 from Rs 33,990 crore in 2006-07. |
| Credit is expected to grow 25-26 per cent from Rs 23,463 crore to Rs 29,000 crore by March 31, 2008. The total business (deposits and advances) will increase 22 per cent to Rs 70,000 crore by the end of the current fiscal. |
| How has the bank geared up to meet the Basel II norms? |
| We have a capital adequacy ratio of 12.06 per cent as on March 31, 2007. Government shareholding is at 77 per cent. The bank has a capital plan exercise for next few years to fund growth in asset and meet Basel II norms. |
| We may require Rs 1,500 crore in next two years, which will be partly raised through Tier II bonds and a small portion from hybrid instruments and a follow-on public offer. |
| If we move to Basel II norms today, we will have a 50 basis point advantage in capital adequacy ratio as capital allocation is lower for rated customers. |
| For operational risks, risk management system has already been set up and considerable headway has been achieved in collecting data on probability of defaults. |
| Government has been advocating merger of banks for gaining size to compete globally. What is the position of BoM? |
| Size does matter. That's why we have prepared a Vision 2010 document to double business to Rs 1,10,000 crore by 2010. High asset quality will be sustained while focusing on recovery of non performing assets. |
| The gross and net NPAs will come down by 50 per cent to 1.75 per cent and 0.6 per cent this fiscal from 3.5 per cent and 1.2 per cent respectively in 2006-07. Efforts are being made to keep fresh delinquency to below 1 per cent of net advances. |
| Are you looking to acquire a bank? |
| If an opportunity is there, we will certainly look at that. |
| What about the interest rate scenario? |
| Inflation is under control. There is no case for any increase in interest rates, based on the current fundamentals of the economy. It is a dynamic situation, it is difficult to say how long it will last. Moderation of credit growth has contributed to the recent decline in inflation. Inflation needs be kept under control. |
| Any plan to revise or reset interest rates? |
| It all depends on the needs for resources. Growth has to be uniform and stable in all segments. Our CASA (current and saving account) deposits are growing 25 per cent year on year. However, 23-24 per cent growth in term deposits is not sustainable. |
| Keeping that in mind, the bank is not aggressive on bulk deposits. Focus will continue to be on growth with quality. The prime lending rate was revised in April to 13.25 per cent. There is no immediate plan to revise loan rates at the moment. |
| Is there any increase in NPAs in real estate and housing portfolio? |
| Our real estate and housing exposures are small. There has not been any increase in NPAs in real estate as we lend to well-established firms. In housing, however, there has been marginal increase in NPAs, but within industry average. We are cautious and not expanding too much in these sectors. |
| How do you see public sector banks versus private banks? |
| Of late, public sector banks have become more customer-centric. There has been a change in approach after introduction of technology and marketing of products. |
| Public sector banks are now going out to solicit business, which was not there earlier. PSU banks are also in a big way focusing on fee-based income by selling insurance, mutual fund and other third party products to customers. |
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