Allahabad Bank credit growth surges 41%

Raises PLR by 75 bps; spares home loans up to Rs 10 lakh.

The Kolkata-based Allahabad Bank's credit portfolio jumped 41 per cent in 2006-07, which also helped reduce its gross non-performing assets (NPAs).

Its credit book increased to Rs 42,380 crore at the end of March 2007, with both retail and corporate borrowings contributing to the growth. Gross NPAs slipped to 2.60 per cent from 3.90 per cent a year ago. Total credit of the banking sector increased 29 per cent year-on-year as on March 16, 2007.

The bank, faced with pressure on margins due to increase in cash reserve ratio and repo rate, has raised its prime lending rate (PLR) by 75 basis points to 13.25 per cent. The bank has spared housing loans up to Rs 10 lakh from this increase.

Its deposits rose 22.77 per cent to Rs 59,545 crore from Rs 48,500 crore. Low-cost deposits "� current and savings account (CASA) "� rose 16-17 per cent. CASA constituted 37 per cent of total deposits, said A Mahajan, chairman and managing director.

The share of bulk deposits rose to around 23 per cent at the end FY07 from 18 per cent a year ago. "However, this did not mean that bank was desperate to raise funds at any cost. The rate offered for bulk deposits were below 11 per cent," Mahajan said.

The bank also raised interest rates on term deposits on more than one occasion in the financial year. The cost of funds moved up to 5.70 per cent (5.01 per cent).

Elaborating on growth in farm credit, he said the agriculture sector advances grew by 33.68 per cent to Rs 7,655 crore. Its share in gross credit is 18.06 per cent.