See 20-22% credit growth by year-end: Indian Overseas Bank

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See 20-22% credit growth by year-end: Indian Overseas Bank

In an interview to CNBC-TV18, M Narendra, chairman of Indian Overseas Bank says, the credit growth will be around 20-22% by the year-end. “After September, the growth rate in credit has been slightly lower because of the economic factors. The industry growth is 18%. We may be around 2% higher than that,” he adds.

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In an interview to CNBC-TV18, M Narendra, chairman of Indian Overseas Bank says, the credit growth will be around 20-22% by the year-end. "After September, the growth rate in credit has been slightly lower because of the economic factors. The industry growth is 18%. We may be around 2% higher than that," he adds.

Below is the edited transcript of his interview with CNBC-TV18's Latha Venkatesh and Gautam Broker. Also watch the accompanying video.

Q: You have reported a fairly decent credit off take last. How do you expect things to pan out?

A: The 44% credit growth was on a low base. Last year, our credit grew only after November 1, when I had taken charge. As on date, we are also coming to the industry level. By the year-end, we may be at around 20-22%. So, we will be moderating the growth.

After September, the growth rate in credit has been slightly lower because of the economic factors. The industry growth is 18%. We may be around 2% higher than that.

Q: Given that you have pursued such high growth, would your asset quality be under more pressure in the near-term?

A: We had higher non-performing asset. From that higher NPA, last year we have brought down to Rs 3,200 crore. This half year, we had around Rs 1,480 crore. But we had also equal recovery of Rs 700 crore. So, the outstanding came down to Rs 3,800 crore. This Rs 3,800 crore is on the top up of our system based NPA where we had around Rs 498 crore, for which we made a Rs 263 crore of provision.

Going forward, against the last three years level of Rs 2,140 crore, we are expecting either nearer to that or slightly higher than that. We will be also having the robust recovery. One-two bigger accounts are taking some time. We may expect the recovery by December or in the first week of January.

This year also we are aiming at around Rs 1,200 crore, Rs 500 crore extra. But over and above that, our endeavour is to take it to atleast nearer to another Rs 700 crore. So, if that recovery comes, we'll be comfortable in as far as the overall NPA is concerned.

However, there are accounts. Hardly around 5.6% is our restructured account. Out of that 95% accounts are standard. As far as other accounts are concerned, I find that the smaller accounts only are having limited problems. It is a temporary phase. They will also have an opportunity to get upgraded.

As far as asset quality is concerned even though in industry this is slightly a problem and it is primarily connected to the economy, I feel that we should not be unduly worried and we should be able to manage it. For Indian Overseas Bank, we are on a better position to have a manageable level.

Q: UCO bank recently restructured the UHBVN account and you have an exposure of about Rs 68,700 crore to that utility. What's the outlook on that? Have they asked for any kind of restructuring?

A: No, there is a request for restructure. They are eligible for restructure because we have security of the receivables and all. But ultimately we have to go for tariff revision and almost all state electricity boards have to go for revision and they have to manage their finance similarly. However, we are examining for restructure.