South Indian Bank has sought RBI nod to restart co-branded credit cards, says CEO

P R Seshadri, South Indian Bank

South Indian Bank has sought the Reserve Bank of India’s permission to restart its co-branded credit cards vertical, managing director and chief executive officer PR Seshadri told Moneycontrol in an interview.

The RBI had on March 14 barred the bank from issuing co-branded credit cards.

The bank wrote to the regulator in December after completing all the necessary corrective actions, the CEO said, adding if needed, they would take more steps. Edited excerpts of the interview:

Why did the bank’s current account savings account (CASA) ratio drop in the December quarter?

CASA ratio reduction seems to be an industry-wide phenomenon. Our drop was lower than many of our peers. In our case, some amount of bulk, current account balance is moving to time deposit due to the high interest rates that banks are offering for deposits.

Due to this, most customers are moving their money from CASA to bulk deposits to earn better rates.

The only way we can overcome this is to have more current accounts, more savings accounts and more transactional flows that ensure that on an average basis, your CA and SA remain where it is.

How much growth in CASA, in absolute terms, can we expect in Q4?

We expect transactional accounts growth should be about Rs 1,500 to Rs 2,000 crore, when we come closer to March 31 this fiscal. We would expect between 8-10 percent growth in our CASA balances.

Why did personal loan growth slow in the December quarter?

Banks give personal loans to their own customers and we are a little bit more cautious and making those offers more judiciously.

Currently, we are very carefully reviewing where portfolio performances are and ensuring that we do the right thing to get ourselves outcomes that we think are acceptable.

For the present, we are being cautious. When the environment improves, we will be a little bit more aggressive.

How were the recoveries in the quarter gone by?

The slippage and recoveries were roughly the same this quarter, which is why the net NPA has come down. On the unsecured side, the recoveries are lower.

We expect Rs 1,400 crore to Rs 1,500 crore recoveries in this financial year. For the nine months, our recovery was Rs 1,025 crores. For the next quarter, we may be able to recover the remaining amount worth Rs 475 crore.

What is the update on the co-branded credit card?

We are awaiting their (RBI) review of our submission. Based on this, if they require any further corrective action to be taken, we will take it and then we will again go back to them.

We are hoping that they will find our submission satisfactory and once they revert, we'll keep you posted. We have written to the RBI a few weeks back.

In November, the RBI imposed a penalty on your bank for putting a lien against the NRE deposit. Have you removed that?

Those liens have been removed and whatever had cost is no longer in effect.

Our submission to RBI also was that while these happened, we were not inconveniencing the customer and we are a very customer-focused organisation. Whatever we do, we try to ensure that customers are not inconvenienced.

What are your projections for the advances for the next quarter as well as the whole year?

Our focus is to ensure that we grow our advances at the rate of 10-13 percent. While we grow our deposits, perhaps a tad slower than that to ensure that our pricing remains competitive. We are sticking with that.