Sanjiv Chadha, managing director (MD) and chief executive officer (CEO) of Bank of Baroda on Thursday said that the domestic advances had grown by 8 percent and a large portion of advances came from the retail secured loans.

“For us advances growth has been fairly good. Our domestic advances have grown by about 8.2 percent which is a couple of percentage points above the industry growth rate. There also, a large proportion of the growth has come from retail secured loans,” Chadha told CNBC-TV18.

He added that Bank of Baroda (BoB) is looking to increase the share of retail advances as secured retail loans were giving better yield than high rated corporates.

“In a liquidity surplus situation, the highly-rated corporates, the good quality corporates we would want to lend are able to command price which is almost unprecedented. They are borrowing at rates which are never seen before. So if you wish to grow your loan book as also make sure that you protect your interest rate margins, while on the liability side you need to make sure a large proportion of book comes from CASA, on the asset side it is secured retail loans which give you the combination of being good quality, low loss giving default, as well as giving you a coupon which is better than what you would get on the high rate corporates. So, that has been the strategy and that is what we want to follow going forward also,” he said.

Chadha said that the CASA growth for the bank had been good and deposit growth had been in sync with the business strategy.

“Our CASA growth has been very encouraging -- growing more than 13 percent. Within CASA, current accounts are growing by 18 percent. We believe this is very important if you have to protect your interest margins at a time when liquidity is surplus. If you do gather deposits which are relatively higher cost and if there is no opportunity to deploy them, then that does tend to depress net interest margins (NIMs). So, our deposit growth has been pretty much on track as per what the broad business strategy is,” he said.

On credit cost, he said that the credit cost of the corporate book should start looking better. However, he said that on the retail and MSME, there still was some uncertainty.

“When it came to restructuring, a very small percentage of borrowers opted for restructuring which would seem to suggest that they are comfortable in terms of paying loans. But again, I would like to strike a note of caution, and my overall assessment would be that the corporate credit cost trends down and to some extent this is compensated by an increase in credit cost on retail and MSME. But overall, on balance, credit cost should be trending down next year,” he said.

On the bank’s capital-raising plans, Chadha said that they will be launching a QIP of Rs 2,000-4,000 crore later in the year.

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(Edited by : Ajay Vaishnav)