See 15% credit growth in FY16: Syndicate Bank

Reema: Walk us through the timeline, when would you like to raise this Rs 2,000 crore? Would you like to raise the entire amount and what will it do to your capital ratios?

A: This plan which we have put up to the board for raising Rs 2000 crore through Qualified institutional placement (QIP)is a plan which we are trying to raise in the current quarter or the next quarter. Within these two quarters we will be raising and at present our capital adequacy ratio is 10.51 which is much above the requirement from the Basel III point of view which is nine percent and the whole plan has been put up to the board and board has approved Rs 2,000 crore raising through QIP and another Rs 1,800 crore through Tier-I bonds and Rs 1,750 crore through Tier-II bonds. All these three raising of the capital will be completed within next three quarters and next March when we close our financials for 15-16, our capital adequacy will be more than 12, precisely it will be 12.50.

Sonia: This total of almost Rs 5,000 crore, Rs 2,000 crore of QIP, Rs 1800 crore of Tier-I and Rs 1,700 of Tier-II bonds, will that be sufficient for you capital requirements or do you have more capital requirements?

A: Nine percent is the requirement and today we have 10.54. With this raising of the capital and the expected business growth, at the end of the financial we will be more than 12 percent or 12.50 as against the requirement of 9.625.

Sonia: Are you expecting any fund infusion from the government in FY16 from that Rs 7,900 crore odd that was allocated and if yes, how much?

A: Last year government has given us Rs 460 crore based on certain performance parameters and our performance parameters are as strong as it was last year, one of the best in the industry, so definitely I am hopeful that government will be able to infuse but we have not accounted for the government infusion, in fact we have not accounted for the accumulated profit which will be adding to this capital, that will be around Rs 1,500 crore. So, that will be also added to the capital and after, the capital base will be around 12.50 percentage in terms of Basel.Reema: What is the reason for this quantum of fund raising if your capital ratios are adequate, even accounting for Basel III, why are you raising so much money?

A: Bank precisely requires a good capital base, that shows the strongness of the bank and we are 10.54, expected level is more than 11 and 12 is very sound level. Last year we had a approval from RBI as well as from the government of India to raise Tier-I bonds of Rs 1,000 crore but we did not raise because the rates were not favourable and QIP also was on the card but we did not do that, so next quarter and next to next quarter we will be doing this.

Sonia: Can you give us an indication of what is happening with respect to asset quality because in this quarter we have noticed a lot of banks including yourself see a tad bit of an improvement in asset quality and that is a good thing to hear. Do you see further improvement in the quarters to come?

A: I am quite hopeful that next quarter and further quarters there will not be any surprises and maybe Rs 100-200 crore more or less something like that will happen and precisely the Non-performing asset (NPA) percentage in terms of percentage gross our net will remain at this level and I am happy that most of the banks have declared this result. I think ‘achhe din aane wale hai,’ something like that is happening with the banks also.

Reema: What would be the credit growth that you are targeting in FY16?

A: Our last year credit growth was 15 percent and we are very aggressive on the retail and Micro, Small and Medium Enterprises (MSME) sector. I am quite hopeful that growth will be around this percentage only.