Vijaya Bank expects Rs 700-cr recapitalisation by end of Q3

State-owned Vijaya Bank expects to receive Rs 700 crore as recapitalisation from the government by the end of third quarter. The bank expects to get a total a Rs 1,200 crore from the government as capital this finacial year.

“The government of India has approved Rs 1,200 crore for our bank, of which we have already received Rs 500 crore in June this year,” said Albert Tauro, Chairman and Managing Director of the bank, on the sidelines of a seminar here today.

This apart, the bank expects about a 20-22 per cent growth in credit and 18 per cent in deposits in the financial year 2009-10.

“We expect credit growth to be 20-22 per cent by the end of this financial year. With rains having picked up, we hope to see a higher demand in the agriculture sector. Also, with the busy season kicking in, the retail credit will also pick up during the second half of this fiscal,” he said.

However, year-on-year basis, the credit growth of the bank this financial year had been subdued at 8-10 per cent, he said. The net interest margin (NIM) of the bank, which was 2.04 per cent for the year ended March 2009, at present stands at 2.38 per cent. “Our NIM was very low so we are focusing on improving it. We plan to take it to 2.6 per cent by the end of this fiscal,” he said.

Fund mobilisation in the current account and savings bank account (CASA) segment was a cause of concern for the bank, he said.

“We are being very aggressive on CASA, year-on-year it has grown by 15 per cent and we want to achieve a growth of 22 per cent by the end of this year,” he added.

The bank, which had exited its life insurance joint venture with Punjab National Bank and the Principal Financial Group (PFG) of the US, would opt for a referral model, said Tauro. It had about 5 per cent stake in the venture.