Further, he added that the government of India may infuse some funds in the bank in FY13. "We are comfortable right now but the requirements are going to go up from January 1 under Basel III regime. We are also in clue before the government asking for supplementing our capital," he added.
Below is the edited transcript of his interview to CNBC-TV18
Also read: RBI's rate easing & Q3 earnings to drive market: PN Vijay
Q: How do you see volume of business growing? That's been the sore point and it's been a particular problem with your own bank. Is there any improvement at all and when would you expect it to improve?
A: As far as our bank is concerned right from beginning we had not targeted any high growth. We have been following a policy of calibrated growth because we needed to look at the composition of our portfolio. We have been trying to actually change the mix which was heavily loaded in favour of corporate loans to retail loans. In that pursuit we have kept our growth target lower than the industry levels.
However, so far it looks that it will be lower even than what we had thought it to be at the beginning of the year. Overall credit growth in the banking sector also has been lower than what was projected. What was projected was more than 17 percent but it has been so far around 15 percent year on year. We are expecting that maybe there will be an up tick in the last quarter and it may still end up around 15 percent. But we are expecting our own growth to be somewhat below or between that.
Q: IDFC is taking over Delhi-Gurgaon expressway asset and there were reports that even you maybe looking at that asset. Now your denial has come through, you are not interested but are banks getting increasingly wary about lending to these road projects?
A: I think it is a case of looking at individual projects. As far as this particular project is concerned we have not been connected with it and we have no proposal before us to get associated with it. However, if there are any other road projects or similar projects where we need to look at their refinancing or securitization after they have become operational, we have been open to it. We will continue to be open to it, in fact that is a good financing opportunity when the project has been implemented. The risk is lower and there is clarity on what is the revenue already and what is it going to be. Therefore, one can make fairly good assessment of the credit.
Q: The industry might not concur because National Highways Authority of India (NHAI) has not been able to award a lot of projects this year particularly because a lot of the already awarded projects are not be able to achieve financial closure. This area, the road segment could be a problem area. Aside of that is there any other area that you feel could still come under stress because a lot of bankers point out the asset quality usually comes up with a lag, there could be problem issue still?
A: I agree that very few new road projects are getting added to the portfolio. However, what I was talking about was the existing implemented roads, where banks have investment. For asset liability reason some of them might also get it refinanced. That is something which can be an interesting source of investment. As far as other sectors are concerned, we are all aware there have been stresses. This was due to various reasons related to implementation of those projects in particular power projects.
Over there several projects have under gone delays and a bit of a cost overrun also. There also we are looking at those projects one by one. I can say for IDBI Bank that as far as share of that particular stress is concerned we have lesser of that because of better selection of projects in the beginning itself. We also do have some of those projects and we are attempting to find solutions to them as well, one by one.
Q: How much do you think would be the non-performing loans (NPL) or the fresh slippages or restructuring accounts in the third quarter now that you have only couple of working days left?
A: Some restructurings are already there in the pipeline and they are going to get concluded within the next two-three days. I would say that it would now be declining from Q4 onwards because most has been taken up for restructuring. Maybe the restructuring process would be completed in the next quarter. However, thereafter the bulk, the volume and the incidence of restructuring should gradually come down.
It is also related to policy measures having been taken by the government in several areas. We are expecting the confidence will return to industry. Whatever, projects have been under implementation, they will get completed, they will acquire pace and therefore the pain will lessen in months to come.
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