Corporation Bank targets Rs 1.5 lakh crore-biz this fiscal: BL

We are planning to grow by 52 per cent in the home loan segment.



Mr J.M. Garg, Chairman and Managing Director
Mr J.M. Garg, Chairman and Managing Director of Corporation Bank, feels that the performance of the bank
has been better than the system in spite of the economic slowdown. For the current financial year, Mr Garg
foresees a business growth of 23 per cent.
In an interview with Business Line, he spoke on various subjects ranging from the bank's targets for the
current financial year, the developments on the deposit and credit front, and the bank's plans for recruitment
among others. Excerpts from interview:
What is the business target for the current fiscal?
We have targeted a business level of Rs 1.5 lakh crore (1.22 lakh crore) by the end of March. This would
translate to a business growth of around 23 per cent, which is quite good, considering the present business
scenario and slowdown in credit offtake.
We have set a target of Rs 90,000 crore of deposits and Rs 60,000 crore of advances by the end of the
fiscal.
How is the growth in CASA?
The focus on CASA (Current Account, Saving Account) has borne fruit in the form of steady year-on-year
growth of around 24 per cent in savings deposits. The slowdown in credit has had its impact on the opening
of current deposits accounts and year-on-year growth has been only 15 per cent.
Growth in retail term deposits has been well over 30 per cent, which should enable the bank to shed some
of its bulk deposits.
Term deposits are growing though the interest rates have come down. People are now putting money in
short-term deposits, and are not going for long-term deposits. That gets reflected in term deposits. With that
the cost of deposits is coming down. I expect it to come down to 6 per cent by March-end. (It was around
6.44 per cent by the end of September).
Incidentally, almost all of the erstwhile high cost deposits have been replaced at very low rates, which will
further bring down the cost of deposits.
What future do you see for the growth of vehicle loans and home loans?
The auto industry is showing signs of revival and production. The passenger car segment has seen an
upturn. The demand for passenger cars has also shown some increase and we hope to see a growth in the
vehicle loans category. The bank has introduced a special product ?Corp Vehi Plus' with a rate of interest of
8 per cent frozen for the first year.
So far we have disbursed about Rs 100 crore under this scheme. We are projecting to nearly double the
vehicle loan portfolio to meet the growing demand in this sector.
As far as the home loan segment is concerned, real estate prices have been showing some corrections and
a number of houses and flats are now being offered by builders at more affordable prices. We are planning
to grow by 52 per cent in this segment. We have launched ?Corp Home Delight' scheme with an interest rate
of 8 per cent in the first year. So far, we have disbursed more than Rs 250 crore under this scheme. For
quickening the pace of sanctions, we have further fine-tuned our centralised processing systems so that we
are able to reduce the time between sanction and disbursement.
(The total vehicle loan portfolio of the bank stands at Rs 960 crore and home loan at Rs 4,400 crore. The
total retail portfolio of the bank is only 18 per cent of the total advances).
How is the performance of agri-loans and what are your plans in this regard?
We propose to increase the share of agriculture in adjusted net bank credit from 11 per cent in March 2009
to 15 per cent by March 2010. To improve performance under agriculture, we will focus on financing well-run
dairy co-operatives and rice mills.
We will also focus on zone-specific initiatives, such as floriculture in Bangalore, organic farming in Hassan,
Hubli and Belgaum, etc. Apart from this, the existing schemes will be made more customer-friendly. Finance
to dealers in fertilisers, pesticides, seeds and farm equipment is also being given focus.
To augment existing technical manpower, a good number of agricultural field officers are being recruited,
who are expected to exploit the hitherto untapped potential in northern and western parts of the country.
Can you explain your plans for increasing non-interest income?
For the current fiscal, the bank has targeted a growth of 45 per cent in non-interest income from core areas
(such as fees, commissions, exchange) from a level of Rs 449 crore in 2008-09 to Rs 650 crore in 2009-10.
The bank has taken several measures such as increase in volume of bank guarantees and letters of credit
business, focus on sale of third party products like mutual funds, bancassurance, gold retailing, garnering
higher share of Government business, and so on. These concerted efforts are showing results and the bank
looks forward to achieving its target.
What plans do you have to raise funds during the fiscal? What amount of funds was raised during the year
till now?
The bank has so far raised tier-I bonds for Rs 500 crore and tier-II bonds for Rs 1,550 crore during 2009-10.
The capital adequacy of the bank was very comfortable at 18.18 per cent (of which tier-I stood at 10.75 per
cent) as at September. This is sufficient to take care of expansion plans in the immediate future. In case the
markets are favourable, we may raise further funds through bonds.
What is happening on the recruitment front?
Corporation Bank has planned to recruit around 1,000 people in the current financial year. About 60 per cent
of these vacancies would be filled in the clerical cadre. Of the remaining, we are planning to recruit around
300 officers in specialist category and around 125 in the general category.