Allahabad Bank eyeing NRI accounts

Public sector bank, Allahabad Bank is eyeing NRI accounts to shore up its business from the segment from the ‘negligible’ level of Rs 400 crore.

The total NRI kitty is estimated at almost $ 48 billion and the annual remittances by Indian expatriates at $5-6 billion per annum.

“Our business from NRI accounts is negligible compared to total volume of the transactions and we are working towards achieving higher growth in this segment,” Allahabad Bank Executive Director M R Nayak told Business Standard.

While the bank already has an offshore branch in Hong Kong and a representative office in China, it is exploring the possibility of opening a representative office at Dhaka in Bangladesh as well.

“We also have a tie-up with the UAE Exchange for facilitating remittances, he informed.

Besides, the bank is trying to increase its corpus of cheaper source of funds by increasing its CASA (current and savings account) level to about 36.5 per cent from the current level of 35 per cent.

“Our CASA levels are best in Uttar Pradesh (UP) at 53 per cent and stand at roughly Rs 36,000 crore,” Nayak added.

Meanwhile, the Bank is expanding its footprint in the country and has RBI licences to open 69 new branches, including four in UP. “Of the new licences, we have already opened 29 branches, mostly in semi-urban areas,” he added.

Allahabad Bank has 2,315 branches with total business of over Rs 1,78,000 crore. More than 1,110 branches have been covered under Core Banking Solution (CBS).

On the proposed base rate system to be implemented from July 1, Nayak noted it could range from 9-10 per cent. The average yield for Allahabad Bank is about 10.57 per cent.

Base rate would replace the current Benchmark Prime Lending Rate (BPLR) and would be fixed on the basis of cost of funds. All the banks are busy arriving at the best formula to calculate the cost of funds.

He noted there would not be any major impact on micro, small and medium enterprises (MSMEs) funding under base rate.

Nayak was here to review the performance of all the 13 lead districts of the bank in UP.

The bank has announced 50 per cent waiver for outstanding agricultural loans under the debt relief mechanism if the borrower pays the remaining 50 per cent before June 30.

While, the centre would provide 25 per of the outstanding loan, Allahabad Bank is giving the 25 per cent subsidy. “These outstanding secured loans are normally below Rs 6 lakh,” he added.