Improving the efficiency parameters and bringing down non-performing assets are the two areas Central Bank of India will primarily focus on, says its new chairman and managing director, Mohan Tanksale. He talks of these and other plans to Abhijit Lele and Parnika Sokhi. Edited excerpts:
How do you plan to catch up with other banks in terms of technology usage and how will that help the bank?
I am looking at improving branch productivity by giving a thrust on alternate delivery channels like ATMs, debit cards, credit cards and internet banking. Hence, the cost of operations will come down and the same manpower will be used in activities like marketing. I have made zonal offices leaner and redeployed 400-500 employees to strengthen regional offices and branches. Going forward, with increasing usage of technology at the back office, at least 10-15 per cent of employees can be redeployed.
Will it have any impact on the bank’s recruitment plans?
This year, we have recruited around 3,000 clerks and around 1,000 probationary officers. Now, we don’t need to go for mass recruitment. There will be fresh recruitments but only to fill gaps created by retirement and to support growth plans. We will open a maximum of 200-250 new branches per annum. The bank’s cost should stabilise this year and then start coming down.
How do you plan to step up recoveries?
Stepping up recoveries is a big challenge for us now. We have identified the top 100 branches in each of the 16 zones according to the concentration of non-performing assets. Recovery camps will be conducted across all these branches. We have also revisited the one-time settlement scheme to make it more objective and speed decision making. These processes are being reviewed on a weekly basis at the top level. We are also looking at upgrading small accounts and then rescheduling these, if needed. The automated NPA recognition system will help us identify soft targets which are critical for three to six months.
Has the bank stopped lending to the power sector?
Temporary issues have cropped up but one cannot stop lending completely to that sector. We will reduce the exposure by cutting the ticket size, provided the project is completely tied up with proper logistics and clearances. We are going cautious on lending to the sector.
How much does the bank rely on bulk deposits? How do you plan to bring it down?
Presently, bulk deposits constitute 32 per cent of all deposits. We will shed high cost deposits and reduce the bulk deposit component to below 30 per cent by March 2012.
What are your top priorities?
I have two prompt strategies. I will focus on improving the bank’s cost to income ratio from 51 per cent to close to 48 per cent, and the return on assets from 0.6 per cent to 0.8-1 per cent in two years, while maintaining the top line with the help of growth in retail business. Corporate lending will be reduced to below 60 per cent from the current level of 65 per cent of the total loan book, and more thrust will be given on the mid-corporate and SME (small and medium enterprises) sector. I think we will be able to achieve the priority sector lending targets by March 2013.
What are your overseas expansion plans?
We recently got approval to open a representative office in Nairobi, which will be functional in three months. In the next financial year, we plan to apply for presence in international centres like Hong Kong and Dubai, where one can operate for global requirements.