Alok Misra, chairman and managing director of Bank of India, spells out his strategy for credit expansion, improving asset quality and recovery for the second half of the financial year, in conversation with Parnika Sokhi and Abhijit Lele. Edited excerpts:
The bank has seen only nine per cent credit growth since the start of this financial year. How do you aim to achieve the aim of 18 per cent growth by March, keeping in mind the economic slowdown?
We have Rs 4,000-5,000 crore of mid-corporate sanctions ready to be disbursed. We have Rs 11,000-12,000 crore of sanctions at hand. Apart from that, there will be substantial seasonal requirements between now and February-March. We are pushing on agriculture and retail, too. So, we may not see some large corporate borrowing but we will see mid-corporate, retail and agricultural growth happening.
Is the mid-corporate segment showing signs of stress?
Some companies are facing pressure. Because of the high rate of interest and the external environment being tough, they are not in the best of times. However, we are talking to them and wherever required, we will have to restructure their dues, as the scenario has changed from the time the loan was sanctioned. Some restructuring requests are coming and some people are also going for corporate debt restructuring.
Your exposure to state electricity boards, many ailing, is around Rs 7,000 crore. Have there been requests for restructuring from any of those accounts?
Yes, one or two of them have asked but the reform process is on, as they have hiked prices. If they revise rates on an annual basis and distribution companies pass on the cost, their efficiencies will be better and they will be able to service the loans.
What are the specific steps taken to accelerate recoveries?
We track accounts once the payment is due after 30 days and mark these to branches, too. Teams are deployed that keep in touch with the borrowers. Day-to-day monitoring is done on the zones and branches that have been earmarked with larger NPAs (non-performing assets). Extra staff in certain pockets has been redeployed for the recovery processes.
Your foreign business has grown substantially. Would that emphasis continue?
Much of the growth in the overseas book was due to trade finance (short-term credit) and Indian companies raising relatively cheap funds abroad. Given the international economic environment, we will now focus more on domestic business.
How will you increase the share of low-cost deposits and what will be the impact of increasing the savings bank deposit rate if you do so?
If we decide to increase the interest rate on savings bank accounts by one per cent across the board, the additional interest outgo will be Rs 625 crore. We are yet to take a call on revising the rate. I think people will not move because of the rate of interest but for service and the products offered.
