What
are your concerns as a banker because of the slowing Indian economy?
Our key concern is the rate of interest as it impacts several of
our borrowers. It particularly affects industries and especially the medium and
small scale enterprises. We have not been able to really make any change in the
base rate because of the high cost of deposits. We expect some relief on July
31.
Poor
monsoon usually leads to risks on loans, deposits growth, and asset quality,
raising the political risk of loan waivers? How do you plan to handle this?
We still hope that the monsoon may turn out to be above average,
if not good. But we have a Plan B, which essentially is to take care of our
assets in the agricultural sector. If some areas are declared drought-hit, then
we will immediately go for rescheduling of loans. We will also lend afresh. The
contingency plans are ready. We only hope that the monsoon picks up. The impact
of poor monsoon on metros and urban areas won't be much. Segments other than
agriculture will not have much of a problem, except in case of power cuts.
Power holidays for three days a week could lead to a drop in industrial
production and may result in supply contraction.
How
was the June quarter performance?
The June quarter has seen very good growth in deposits,
particularly in the retail segment. We are not a great player in the NRI
segment, but even there, we have seen very good growth. As far as deposits are
concerned, we have absolutely no worries. But credit offtake has been sluggish,
especially in the case of large corporates. But agriculture is growing and
MSMEs are growing better than in the corresponding period of last year. The CD
ratio is around 75-77%. Our maximum CD ratio so far was 79.5%. We are 2-4% less
mainly because of the lower credit offtake by large corporates. The second half
of the Indian economy is generally considered to be a busy season. I think by
the year end, we will reach 78-79% of CD ratio.
What
will be the key driver for SBH's growth?
Our key growth driver is going to be retail which includes MSME,
particularly the micro sector where we are targeting a growth of 60% over the
last year. Agriculture will remain a focus area. In the personal segment, we
are trying to push aggressively educational loans for vocational streams at the
ITIs through our semi- urban and rural branches. I do hope that vocational
education could be a good source to not only establish a connect with the
people, but also to improve the quality of our technical manpower. We will take
it up as a mission.
You
had said there was pressure on net interest margins? Is it getting worse?
We had a net interest margin of 3.5%. I expected it to fall by
20-25 basis points during the current year. In fact, we are marginally up by
3-4 basis points. This was possible as we brought about a reduction in deposit
rates in some buckets. We have a very conscious policy of reducing our bulk
deposits with very high interest rates. I see a definite bias towards lower
interest rates. Lower interest rates and deposits have a lag. It doesn't happen
immediately. So, I still stick to the position of a 20-25-basis points fall in
NIM for the whole year.
How
do you explain asset deterioration, restructurings and incremental NPAs?
Well, the slippages are happening in the corporate field. The
requests for corporate debt restructuring, or CDR, has been increasing. On an
average, we see 3-4 requests per month. We have set up a cell to take care of
those accounts, so that there are no slippages in the restructured accounts. So
far, we have been able to manage without any slippages in those accounts.
Veerapagupathy,
Chothavilai Beach,
Thengamputhoor,
Kanyakumari.
Ph: 04652-221337, Mobile: 8220099080.
Email: aveholidayhome@gmail.com, Website: aveholidayhome.com
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