See 15% credit growth in FY13: Central Bank of India

Public sector banks have brought about a lot of changes over the last few days. Initially, they started with the consumer loan rates being cut and then State Bank of India (SBI) lowered deposit rates quite substantially. In an interview with CNBC-TV18, Chairman of Central Bank of India, MV Tanksale said SBI has certainly given a lead with the rate cut and they are looking at revising deposit rates downwards. According to him, the liquidity situation of Central Bank is comfortable and they need to reduce the cost of funds.
 
Tanksale further said that loan growth is expected to pick up in Q3 and it has been sluggish so far. He also does not expect significant slippages in Q2. The bank is now eeying credit growth of 15% in FY13.

Meanwhile, Central Bank of India is also looking to raise capital but, Tanksale reminds that valuations are too distressed at the moment. The price to book value of the stock is not attractive for QIP and therefore, have requested for government support for additional capital.

Here is the edited transcript of the interview on CNBC-TV18.

Q: Are you contemplating a big cut in deposit rates like your larger peers SBI has unveiled recently?

A: I don’t think that I do a big cut but certainly SBI has given a lead to us and one thing is sure that all of us are comfortable on liquidity. We must look for reduction in our cost of deposit. Today I will definitely take a call and sit with my asset-liability committee (ALCO). As regards the rate of interest cut on the retail lending, I think I was the first to declare it in the last week of August. We had cut down on housing and the car loan rates to boost these areas.

Q: Is it because generally credit growth has been very sluggish in these areas or is it with an eye on the festive season which is coming up and this is a Diwali specific boost that you are trying to put in for a couple of months?

A: I think the credit growth in these areas have been around 20% or so, but typically for all the festive seasons we look for this kind of a boost. So we have not only given a boost to the rate of interest, we have even waived the processing charges and making it more lucrative and attractive for the retail consumer.

Q: Of late did you see a lot of sluggishness in these markets because the two-wheeler sales numbers, even generally auto sales numbers have been quite weak, did you experience a lot of sluggishness at your end?

A: Yes, it is true that the sluggishness is there. But, typically in our country, it is only in Q3 i.e. from September to December the real growth is seen and it is better that we prepare ourselves for that right from today.

Q: What is going on with the asset quality because you have had some substantial restructurings, are things this quarter looking as bad as the past?

A: No, let me tell you very honestly that my bank definitely had an issue on asset quality and restructuring. It was primarily because I had large exposures on the distribution companies (discoms) and all those issues have been addressed till previous quarter and I think this quarter, I should be definitely much comfortable as compared to the previous quarter.