Central Bank of India has hit a century of existence. Vijayalakshmi R Iyer, executive director, shares the experiences of the long haul and outlines what comes ahead, in an interview with DNA.
Q: As you celebrate the centenary, what has the journey been like?
A: We have had many ups and downs, but we are in the frontline today, thanks to the trust and loyalty of our 3.5 lakh customer base, and the efforts of our employees past and present. We were a little late in the adoption of technology, but we are catching up. In terms of ATMs we are about 1,300-plus, we hope to cover about 4,000 branches before March. Today, if you see in terms of technology and products we are no less than any foreign or private bank. There were over 3,700 villages which we had to cover under financial inclusion by March, but we have done that already. Today we have business of about Rs3.28 lakh crore. While we are No. 3 in terms of branch network, we are the sixth largest in India in terms of business.
Q: What about the road ahead?
A: There is a lull in corporate growth, and the banking industry has grown by around 6% from April to September. Though the Reserve Bank of India (RBI) has said that credit growth will be around 17.7%, it will be a little difficult to achieve that. At Central Bank, we want to re-align our balance sheet, reduce dependence on the corporate sector and increase our retail advances. Retail is only around 8% today which we want to improve to 14% over the next three years. As of today we have only 14 central credit processing cells, which process only loan applications related to retail and small and medium enterprise advances. This we want to enlarge to 74 before March. That will ensure efficiency in delivery by reducing turnaround time.
Q: The RBI has finally taken a pause…
A: The RBI has given a positive indication this time by taking a pause in the interest rate. Nonetheless, the growth figures are yet to come in from the government. Interest rate alone is not the criteria, the other growth triggers are important as well. RBI is committed to having a system of regulation such that investments are encouraged. India is not going to have only high interest rates, the signs are already on that it will start reducing from maybe February or March. The country’s infrastructure is a growth story anyway. Though you may find some policy logjam right now, in a democratic set up these challenges are already there. Things will get sorted out, once interest rates start coming down, I’m sure the growth will definitely catch up.
Q: What about bad loans?
A: We have given the guidance that our gross non-performing assets will be around 3.5% by the end of the year, which currently is at 2.97%. This is just to provide some room for the bank. We will try to contain it below 3.10%. This sounds possible because what we realised is that when the bank migrated to core banking systems (CBS) a lot of the data requires enhancement. That is being taken care of now. Smaller the amount of the loan, the number of accounts was huge therefore data collection is taking a little longer. We finished CBS only in December last year and it generally takes 3-4 months before the stabilisation of various modules. We were stabilising till March-June and then we have taken up the data enhancement immediately. In the last quarter we have collected data of loans up to Rs10 lakh, that itself was a very gigantic task. In the coming quarter we expect to target accounts with loans between Rs5-10 lakh, and in the following quarter accounts with loans from up to Rs5 lakh.
Currently we do not have an overseas branch. We have made applications to the RBI for representative offices in places like Dubai, Hong Kong and Mozambique. We have already received approvals for a representative office in Nairobi which we will be opening by end of February.
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