In an interview with CNBC-TV18, Murali Ramaswami, executive director of Bank of Baroda, talked about the bank's financial conditions, loan recovery and its exposure to Esser Steel, which is under insolvency process, among other things.

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Q:

Do you have exposure to Essar Steel? Did you make any money?

A: In Essar Steel we had exposure, but we did not make any money because we have sold it. As it was cash outright sale, so we were not making any money in that.

Q: How is the recovery situation so far this year and how do you expect to end the year in terms of recoveries?

A: Our recovery has been very good. As of now we have got about Rs 9,500 crore already through NCLT--some have been approved, and some are under approval. So, in the next 60 days I am expecting about Rs 9,450 crore resolutions to happen. Slippage also has come down. Normally our slippage used to be about Rs 6,000 crore, now in this quarter I expect only Rs 4,000-4,500 crore.

As of September 30, we are at 10.25 gross NPA (non-performing asset) ratio and net NPA of 3.91. I expect it to reach below 10 by March, that is what is our expectation. So, the recovery has been good. Lot of NCLT cases are getting resolved.

Q: Can you repeat the number? You said you have made Rs 9,000 crore so far.

A: Already we have made good recovery and Rs 9,000 crore in NCLT decided cases which (the money) I should get in next 6 months, that is what I have factored in.

Q: Can you give us the names of the cases where you expect resolution to come smoothly over the next say 6 months?

A: I may not be able to share names, I can give you the broad industry--soya industry we have got some exposure, iron and steel some exposure, then textile-- these are the broad areas.

Q: Can you tell us what the growth situation for Bank of Baroda will look like/ How is loan growth at the moment and what is the expectation for the second half of the year?

A: We are happy to share that our loan growth has been good. Our retail (segment) is doing extremely well, we are clocking as of now 12 percent annualised growth and it comes 7 or 8 percent if you take year-to-date. If you segment it further, our auto loan is growing at 22-23 percent, home loan is growing at around 5-6 percent and education loan around 11 percent and other loans around 11-12 percent. So, retail loan we are doing extremely well. In the outreach programme also we have sanctioned about Rs 32,000 crore. MSME segment has also (witnessed) marginal growth. There is about 2 percent growth in agriculture, but the important point which I want to highlight is corporate growth has picked up, corporate credit has picked up as far as Bank of Baroda is concerned. We have sanctioned about Rs 32,000 crore in the last one month out of which Rs 9,000 crore is already disbursed. In the next 15-20 days I expect another Rs 20,000 crore disbursement.

If you ask me which are the sectors? They are existing customers of our bank as well as some existing industrialists, they are putting new capital investment which is a welcome point. They are installing new fixed assets for which they are coming (to us). Then we are giving to procurement agencies for procurement of wheat and all those things. So, investment is picking up.

Q: Which are the industries where you said corporate growth have picked up? Which sectors are these?

A: Contractors are picking up, this is one area which is seeing traction. Then procurement agencies.

Q: Largely these are PSUs. Right?

A: Procurement agencies are PSUs (public sector undertakings) mainly. Contractors are mostly private sector contractors. They are executing railway projects, road projects, among other things. Some industries which are in power, textiles, are putting capital equipment's for cost cutting, as well as, forward integration and backward integration. So, demand from the corporate for putting in plant and machinery or putting in new fixed asset creation has started. So, we are able to give new number in last one month.

Q: At the end of half year, your advances growth was flat, up 0.7 percent quarter-on-quarter. What will you post in terms of the overall loan growth for either 9 months or full year?

A: If you take 9 months, as of now we are at 745 which is marginally higher, may be 1 percent or 2 percent growth over June. However, we have got sanctions of about Rs 32,000 crore in last one month and out of which at least Rs 25000 crore will be disbursed. So, in December I should have about 5-6 percent growth and in March I think if the same momentum continues, I will be having 11 percent growth.

Q: What about agriculture, are you seeing any kind of pick-up in loan growth in the agri sector because we hear that the rural distress still continues. What are you seeing at your end?

A: Agri growth as I told you is positive, good growth is there particularly in the last two months, not only agri, agri allied crops are also witnessing good growth. I don't think there is any agri distress, to my feeling there is good growth.

Q: Is the watch list likely to increase at all?

A: No, our (Special Mention Account) SMA II portion is Rs 11,000 crore, SMA I is about 14,000 crore. So, SMA I normally doesn't slip. SMA II of Rs 11,000 crore, there might be slippage of about Rs 4,200 crore. When I met you last it was Rs 14,000 crore SMA II, it has come to Rs 11,000 crore. So SMA II has come down for our bank as such.

Q: Can you give us some idea how margins will pan out in the current quarter?

A: Margin should be good, net interest margin (NIM) should be good because we are at 2.7 percent domestic and 2.9 percent gross. I expect margin to be 3 percent above, NIM should be above 3 percent because our savings bank is showing good growth, current account I can tell it is maintained, saving bank account is showing around 9-10 percent growth. We have still a lot of bulk deposit. Our cost which was about 5.14 percent has come to 4.46 percent - cost of deposit. So, yield also though it has marginally fallen, in December there should be no problem on current account and savings account (CASA) and the NPA also has come down. So in that process I think my NIM should be at 3 percent.

First Published:Dec 17, 2019 6:18 PM IST