Allahabad Bank aims to arrest the surge of non-performing assets with some innovative ideas. Chairperson and Managing Director Shubhalakshmi Panse said that advances were likely to grow in the range of 17-18 per cent, while deposit growth could be around 20 per for the industry during 2013-14.Excerpts from the interview:

With the Budget round the corner, what are you expecting?

In my opinion, the key will be direction to growth. Our focus will be on sops for specific sectors. Accordingly, we will plan our strategy for credit to be given to specific sectors on which the Government is also giving more attention. At the same time, such a focus will also help us to decide which sectors where we are not required to be aggressive.

Non-performing assets (NPA) are on the rise. How are you going to tackle that?

For the quarter ending September 30, our gross NPA was 2.95 per cent while net NPA was 2.1 per cent. Historically, gross and net NPA have been below 2 per cent and 1 per cent respectively. With the current economic scenario, we all know why NPA has surged. However, our effort is now to arrest the surge.

I can tell you about the strategy of my bank. We now work on daily target and not quarterly targets. Every day, I myself get the status on recovery and upgradation of assets. All the officials concerned have been asked to send me an SMS daily and I reply to them. Such a monitoring has given very good result and it will be reflected in the third quarter (October-December) numbers.

At the same time, we have formed a special vertical for credit monitoring under a general manager. This particular vertical monitors every loan account. Here, we give more attention on loan accounts categorised as ‘IRAC-3’ (income recognition asset classification). Such an account is one where interest and/or instalment of principal remain overdue for more than 60 days.

Since any term-loan account will become NPA, if interest and/or instalment of principal remain overdue for a period of more than 90 days and customers alerted after two monthly EMIs are not paid, we start alerting the customer after the 31{+s}{+t} day of the first instalment due itself and do not wait for 60 days. This has also helped us in checking NPAs.

What growth do you expect in credit and deposit?

Generally speaking, banks are looking for a growth between 15-17 per cent in credit and 13-14 per cent in deposit. If you go into micros, there is not much growth in sectors such as manufacturing and especially those infrastructure projects which rely on coal and iron ore.

However, good growth is there for road projects and some segment of micro, small and medium enterprises (mainly those which are in engineering, procurement and construction or direct selling).

At the same time, we have also registered good result in sectors such as IT, investment banking and education.

What about the retail-loan segment?

There is good growth in auto and home loans. More particularly, in auto loan, we are getting good response from tier-IV and -V towns, semi-urban and rural areas. Here, the demand is more for two-wheelers. There is reason for that. With the growth of private security agencies and private taxi operators, there is more demand for two-wheelers. At the same time, expansion of the road network has prompted for upward mobility in rural areas.

On the other hand, good growth of home loan is being seen in cities such as Bangalore (because of the IT industry), Pune (because of the auto industry), Vizag (because of the steel industry) and Chennai (because of the IT industry). Now, more and more people are also going for a second home either for investment or for upgradation, which is also reflected through increase in home loan.

What is your assessment about credit and deposit growth in 2013-14?

Still, there are some lag effects of the slowdown, so you may not find banks very aggressive in terms of advances. Still, we feel that advances are likely to grow in the range of 17-18 per cent, while deposit growth could be in the range of 20 per cent. If you ask about our bank, in particular, we will focus more on savings accounts, since we feel that this kind of deposits are good for our business.

How do you plan to prop up your gold-loan scheme?

Here we would like to highlight our key differentiator. Normally, private companies give you gold loan at a higher with increasing interest rate, that is charging 12 per cent in the first year and higher in the years after that. Not only this, they do not hesitate to sell the jewellery immediately after default. However, we charge 12 per cent for the entire loan period. Secondly, if a borrower defaults, we use auction route where the borrower himself can participate.

Since we are seeing more growth of gold loan in southern and western States, we plan to expand our branch network in the southern region. At present, we have nearly 250 branches in the southern region.

The Centre aims to extend direct cash transfer all over the country. There is renewed focus on financial inclusion. What is the plan now?

All the banks managed to achieve the target of covering 74,000 villages under the financial-inclusion programme. A total of 74,194 villages with population over 2,000 were covered by March 31, 2012, and over 3 crore bank accounts were opened. Then the plan was to cover all the villages with population of 1,600-2,000 by March 31, 2013 and all the villages by 2015. Now the plan is to cover all 6.3 lakh villages under financial inclusion by December 31, 2013. We have devoted good amount of our resources and we hope to achieve the target on time.

> shishir.sinha@thehindu.co.in