B A Prabhakar, who took over as chairman and managing director of Andhra Bank last month, has drawn up his to-do list. He shares his priorities in an interview with Parnika Sokhi. Edited Excerpts:
Have you listed the areas needing immediate attention?
My immediate priorities are to concentrate on management of non-performing assets (NPAs) and net interest margins (NIMs). Slippages have gone up because of a few accounts but recoveries have been good. As a result, we have been able to show a net reduction in NPAs this quarter. We recovered about Rs 500 crore in the third quarter. We aim to show better results in the next quarter. Our NIM of 3.8 per cent is in line with our public sector peers. We aim to maintain this level. We want to also focus on branch expansion policy outside Andhra Pradesh.
You said the bank doesn’t aim to lend to micro finance institutions (MFIs) as of now. Is it on fears that the exposure to the industry could turn bad?
No, we have a negligible amount of bad loans from that sector, but we have restructured three accounts there. The reason for not going aggressive in that sector is that we would like to have more clarity on the regulation and legal structure there. We can look at expansion in a big way only after we have clarity on those issues. All the accounts restructured from the sector are from Andhra Pradesh. About half the total exposure of Rs 300 crore in MFIs is from that state. So, incremental lending will take place selectively, and preferable outside Andhra.
Which are the target sectors to increase exposure?
We would like to have an even growth in small and medium enterprises, and the retail category. We have not fixed any targets, as such, but these will be two focus areas that will enable us to meet our priority sector commitments. Loans to large corporate bodies form about 50 per cent of our portfolio and whatever credit growth we are targeting has to also come from that segment.
What are your plans to boost fee income?
That is one area we’ll have to work on. We are planning to take up third-party product distribution in a big way. That is where the focus on retail comes in. But we will also focus on increasing the retail liabilities and assets.
Your growth targets for advances and deposits?
We are planning to achieve credit growth of about 16 per cent and deposit growth of about 18 per cent by the end of this financial year.
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We will wait for guidance on monetary aggregates from the Reserve Bank of India (RBI) before drawing up plans for the next financial year. That will give us some idea on the potential growth in the coming year.
Any thoughts on revising the interest rates on loans and deposits?
We’d like to wait for RBI’s next policy announcement.
Your hiring plans for the next financial year?
We are planning to hire about 1,450 clerks and 800 officers to take care of next year’s branch expansion and also to take care of the attrition in the bank. We plan to add at least 150 branches next year.