Dena Bank is increasing its focus on SMEs, retail and services while seeking to recover doubtful loans to large lenders. The bank sees Jan Dhan Yojana as a significant game changer, Ashwani Kumar, chairman and managing director, tells Sumit Sharma.
Do you see pick-up in sector credit?
A lot of infrastructure projects got stuck and growth in many public sector banks (PSBs) was on account of infrastructure lending. Once there is improvement, borrowings should start picking up.
Do you foresee changes in Dena Bank’s loan composition?
Over the past two years, we have increased our focus on retail and SMEs. Credit to retail has grown 20 per cent and SMEs 35 per cent year-on-year. We expect growth to get faster in these areas. We are improving our non-interest income, including from UIDAI where we are the registrars. We have also started programmes to help young entrepreneurs get credit. We plan to launch it in a big way. Repo rate cut by the RBI should help.
How will Jan Dhan Yojana impact the banking sector?
It will be a big game changer. About 40-45 per cent households were not in the formal banking sector, which was a big drawback for our economy. Close to 11 crore new accounts have been opened under JDY. About `9,000 crore deposits have come into the system, even though 75 per cent accounts have zero balance. Once these accounts start getting a balance, a big chunk of CASA will come into the banking industry.
Does it help that 60 per cent of Dena branches are in rural, semi-urban areas?
Dena Bank is the SLBC convener in Gujarat. The state completed 100 per cent inclusion much ahead of many other states. Our major presence is in Gujarat with 630 branches (total 1,655 in September). It should boost our business growth in those areas.
What’s your outlook for GDP?
The government has taken major policy decisions. Business sentiment has picked up and next quarter onwards one should see greater improvement.
Plans for 4.8 per cent gross NPAs?
We have special teams for recovery. We are selling some NPAs to asset reconstruction companies, and also forcing sales under the Sarfaesi Act. Only lumpy accounts, where we have small shares as consortium lenders, have slipped.
Share sale plans for capital adequacy?
We have asked the government for some capital, and are also seeking permission to reduce its stake from 58 per cent to 52 per cent. We may raise capital from tier-1 compliant bonds.
Does consolidation make sense for PSBs?
In the longer run, as capital becomes a constraint and technology spend rises, two-three banks could come together. There are no immediate plans of consolidation.