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M V Tanksale, chairman and managing director of Central Bank of India, says non-performing assets (NPAs) in the banking system will grow for a while and as long as credit creation will be there, there will be slippages. In an interview with Neelasri Barman and Vrishti Beniwal, he talks about restructuring, business growth and capital raising plans. Edited excerpts:
You have a Rs 350-crore exposure in Kingfisher Airlines that you hope to recover. How will you do so?
All public sector banks are seeing erosion on asset quality for several quarters. Do you think NPAs have peaked out?
Asset quality can be divided into two segments, one coming from the corporate sector and the other from small and medium enterprises. If a bank is more dependent on big corporate entities, then they are going to get impacted.
There is nothing called NPAs peaking out. As long as credit creation will be there, we will see slippages.
How much of NPAs do you plan to put on sale this financial year?
Many banks are looking for such a sale for balance sheet management, including me. I have put on the cards a selloff of about Rs 400 crore. We will have to see how much of it we can sell.
What are the concerns due to which NPAs are not getting sold?
The sale of assets should be at a right price. If I get one, I shall sell it.
What debt restructuring have you seen this year?
Our total restructuring book is about Rs 21,000 crore and I think our major restructuring is over. I am looking at another Rs 2,000-2,500 crore of restructuring.
Any capital raising plans?
It will be around Rs 2,000 crore. It will be by the government but they’ve also made very clear that they would appreciate it if we go through a rights issue, so that the minority stakeholders are respected.
When are you planning the rights issue?
Right now, I do not know how much the government will commit to me. Once they commit, I shall decide about it.
The Reserve Bank of India has been concerned that monetary transmission is not taking place. When do you see that happening?
Every bank has started reducing their high cost deposits. I have also brought down mine down to a large extent and reduced deposit rates. And, we have reduced lending rates on a selective basis, like home loans and car loans. We have also reduced our rates on micro, small and medium enterprises and for agriculture. Selectively, we have already transmitted whatever benefits we have got out of the cash reserve ratio reductions.
How is the credit growth pick-up in the second half of the year?
On a year-on-year basis, we have seen 17 per cent growth and I feel 15 per cent on a year-on-year should be achieved. Our focus is on retail (lending), which is expected to growth by 25 per cent or more.
What is your outlook on net interest margin?
My NIM is 2.66 per cent. I feel we should be able to maintain it at 2.7-2.75 per cent for the financial year.