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Don't expect much out of RBI's policy: MV Tanksale, Central Bank of India

We have already been given approval by Government of India with the capital support of Rs 2406 crore, says MV Tanksale

ET Now|
Mar 16, 2013, 07.37 PM IST
We have already been given approval by Government of India with the capital support of Rs 2406 crore, says MV Tanksale, Central Bank.
We have already been given approval by Government of India with the capital support of Rs 2406 crore, says MV Tanksale, Central Bank.
In a chat with ET Now, MV Tanksale, CMD, Central Bank of India shares his views on Q4 results and upcoming credit policy.

ET Now: The budget proposes to introduce inflation indexed bonds. Given the trend on deposit growth, do you think instruments like this will offer some value?

MV Tanksale: See in the real market economy if you really want to bring the depth and widen the markets, you have to have the various options which are really long to the market realities because today it is true that the investors would like to have their investment linked to the inflation whereby they really do not lose out on the real interest rate gains which are almost legible when the inflation is very high.

ET Now: Are you seeing any sort of pickup in your corporate loan demand. Do you think you are likely to meet RBI projection of 16 per cent credit growth?

MV Tanksale: The Q4 is certainly better than the previous three quarters and I would not hesitate to say that everyone of us is looking up and feeling much more positive as compared to what it was in the past.

ET Now: Does the asset quality continue to remain issue for central bank and which are sectors which are causing stress to you?

MV Tanksale: Well I have been explaining on this aspect for quite sometime to all my viewers. I can only assure you that central bank is no way different from the economy. If the economy downturn is there the stress is likely on the big assets but as far as the smaller assets are concerned, let me tell you with confidence that things are absolutely in control. In fact my gross NPA for the ticket size below one crore has come down below March 12 position.

ET Now: Banks are borrowing heavily from the repo window and using the funds to lend in the commercial paper market, is this a cause of concern?

MV Tanksale: Let me tell you that it is really not so exactly but then yes going forward looking at the everyday repo of more than Rs 100,000 crore everyday and but then every bank is trying to really keep a discipline of not trying to work for the top line and so long there is no compulsion to work for top line, the market should remain more or less balanced.

ET Now: What are your expectations from the RBI policy which is due 19th of March?

MV Tanksale: The things have not really changed drastically then what it was in the past so I do not expect anything great to happen.

ET Now: And could you also give us a sense of your credit as well as your deposit growth on year to date basis?

MV Tanksale: Well we should be in line with the Reserve Bank guidance of around 13 per cent to 14 per cent on deposits and around 15 per cent to 16 per cent on credit.

ET Now: What is your outlook on margins going into Q4 and are you seeing any pressure on your margins as well?
MV Tanksale: Well margin pressures are very obviously there because all of you should know that we have reduced our base rate by 25 bps and more than 80 per cent portfolio being floating linked to base rate, obviously the interest rate reduction has happened on the larger portfolio. While on the deposit there is always a lag effect more so the last 15 days are very evident that most of the banks are increasing the rate of interest on deposits and being the case obviously the pressure on margins are very obvious.

ET Now: Govt will be infusing around Rs 14,000 crores in PSU banks in FY14, what are your capital requirements for the next year?

MV Tanksale: Well I have already been given approval by Government of India with the capital support of Rs 2406 crore. We have extraordinary general body meeting on 18th of March, that day we will resolve to issue the preferential share to the Government of India to that extent and I am very confident that we will be in the money before 31st of March thereby my tier I capital will be substantially above 8 per cent, of course the government holding will go up from 79 per cent to 83 per cent but then probably I will look it as a positive scenario that probably when the bank achieves the price to book value of 1:1, it will be a great opportunity for the bank to divest a substantial divestible percentage available to the bank, almost 32 per cent.

Also Read

RBI may not cut rates till inflation moderates: MV Tanksale, Central Bank of India

Central Bank of India plans to tap gen-next: MV Tanksale, Chairman & MD

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