How do you see your business growing?
IDBI has always had more corporate exposure but since PCA (Prompt Corrective Action) was imposed, partly due to force majeure and partly due to choice, we shifted to retail; As a result, we are now 63% retail on the asset side. Home Loans and Loan Against Property make up 37% of us loan book, Our book is now well balanced. Because of our heritage we have some expertise like project finance. We would like to make good use of that too. So, at this stage, we would like to grow equally in all sectors. We aim to maintain Retail at 60% and Corporate at 40%. We will diversify our exposure to the corporate book and avoid taking high exposures to a particular group or industry so that we stay safe even if a particular industry faces a problem. We plan to increase advances by 10-12 per cent this year. Earlier, we were focused on raising bulk deposits due to our legacy. But now our CASA (Current Account Savings Account) deposits stand at 56% and we have been able to reduce the cost of our deposits by about 200 basis points over the last four years. We expect to keep the CASA deposit at 50%. Our bulk deposit ratio has come down to 5% and may go up to 15%, especially if we increase the advance.
Competition in retail is tough. What is your plan to defeat it?
Yes, there is stiff competition in the retail sector and it is a price sensitive product. We have restructured our organization with processing centers and marketing through branch as well as direct selling agents. We have digitization along with personalized service which, along with competitive pricing, will help us achieve 10% to 12% growth in retail, agriculture and micro and small enterprises. we have also tied up LIC for and marketing the credit card
employees with the public. On the corporate side, we expect the demand for loans to improve. We are seeing some demand from the infrastructure sector as well, but we are proceeding cautiously. We will also look for highly rated clients at competitive rates as we now have an advantage in lower cost of funds. We expect an ROA (return on assets) of 1% this year. We plan to open 44 branches this year.
“I am targeting to recover around Rs 4,000 crore this year… NCLT cases are also gaining momentum,” he said.
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“I am targeting to recover around Rs 4,000 crore this year… NCLT cases are also gaining momentum,” he said.
Your non-performing assets (NPAs) are low but still high. How do you expect recovery to improve?
In the last three years, especially post-Covid, there have been some delays in NCLT (National Company Law Tribunal) cases, but we have improved recovery through dialogue. This year, I am targeting to recover around ₹4,000 crore. Yes, big accounts are gone but this year as well as next year we expect recovery from old bad accounts mostly through settlement. The NCLT cases are also increasing after the government has filled some posts. Then there will also be the amount realized by the sale to NARCL (National Asset Reconstruction Company). All of these accounts are close to being fully provided. Our slippage ratio will be less than 2%, which will also reduce our cost of credit.
Are you seeing any stress in ECLGS linked loans?
No. In MSMEs, overdues are only 3%. In agriculture, it is slightly higher, around 7% to 8%. So we are not seeing much stress, although we do expect some slippage if the economy does not improve, which is why I expect the net NPAs to be around the 1.30% level of March 2022. We are not seeing new tensions building up, but we are cautious.