Canara Bank to recruit people proficient in local languages: MD & CEO

We target that our recoveries should be substantially higher than the slippages, says K Satyanarayana Raju

‘Canara Bank to recruit people proficient in local languages’ &Canara Bank, which has waived charges on non-maintenance of minimum balance, plans to compensate for the revenue loss by canvassing ₹10,000 crore of additional deposits in savings account. The Bengaluru-based lender’s managing director and chief executive officer, 

 

K Satyanarayana Raju, in a telephonic interview with Anupreksha Jain pointed out that any further rate cut by the central bank would put margins under pressure for another six months. Edited excerpts:

 

How do you plan to compensate for losses arising from the non-levy of fees for those not maintaining minimum balance in savings accounts? How much income did this generate?

 

On an average, we were getting around ₹289 crore from charging for non-maintenance of minimum balance, approximately. This will be compensated by canvassing additional ₹10,000 crore in the savings bank. If we can canvass additional ₹10,000 crore, the cost of funds will match with that income.

 

What are your hiring plans for FY26?

 

In the existing scenario, the thrust is on recruiting people only with the local language, especially people who sit at the counters. This year, we intend to recruit around 3,000 associates. These will be recruited state-wise with criteria of proficiency in the local language. The thrust is on recruiting associates not officers. We have created a promotion policy for associates that within three years, these associates can appear for promotion test and get elevated to an officer level.

 

How much improvement is expected in the net interest margin (NIM) in coming quarters amid a 100 basis points cut in the cash reserve ratio (CRR), starting September?

 

We are expecting a 5-6 basis points (bps) improvement in NIMs subject to the condition of no fresh rate cuts by the Reserve Bank of India. There are chances that the central bank may go for one more cut in the repo rate in coming quarters, so then again the interest margins would come under pressure for the next six months.

 

What are the bank’s recovery targets for FY26?

 

We target that our recoveries should be substantially higher than the slippages. Following this approach, we are anticipating slippages around ₹7,000-₹8,000 crore for the year. Therefore, our recoveries will be around ₹10,000 crore for FY26. Even in the June quarter, our recovery and upgradation was around ₹2,477 crore, whereas our slippages were only ₹2,150 crore. We are able to maintain this trend on a quarterly basis.

 

Going forward, what sectors in retail does the bank want to focus on expanding?

 

The key thrust area will be housing as the book is growing almost 14 per cent.  This will be  followed by vehicle and educational loans. These two portfolios will be given very high priority. With the  Pradhan Mantri Vidyalaxmi portal, we are aggressively going for educational loans because these are all reputed institutes. Then last year, we introduced secured personal loans against the pledge of the gold in metropolitan urban areas. That product also will continue to be our lead product.

 

The RBI has given a deadline for know your customer (KYC) updation for inoperative accounts of more than 10 years.What are the steps the bank is taking in response to this directive?

 

We have expanded our network of business correspondents, touch points, and active points. Earlier it was only 8,000. Now, we have increased it to 15,000. We are actively using these BC channels for complying with KYC norms. KYC updation is a regular practice. The sudden thrust has come because Pradhan Mantri Jan Dhan Yojana accounts have completed 10 years. That is why now huge numbers are coming for KYC compliance. Volumes are very high because the scheme was started in 2014. Within the RBI guidelines, we are expediting or we are even conducting programmes at branch level also. We are running campaigns to complete this on a priority basis.

 

The gold loan business has been rendering more than normal returns. Do you think the returns will normalise soon?

 

Earlier, on an average, the return was around 9-9.10 per cent on gold loans. This has come down to around 8.65 per cent. Returns largely depend on rate cuts. Considering no fresh rate cuts, the returns on gold loans would stabilise around 8.5-8.6 per cent for the bank. However, if more rate cuts are to happen, then returns will come down a little further.

 

What are the branch expansion plans, especially for those that cater specifically to micro, small, and medium enterprises?

 

This year again we are giving licenses for 250 branches. Every year we open several branches. The thing which has changed now is the selection of a location. Earlier, it used to depend on manual selection with the feedback from the local authorities. Now data analytics is being used. There is a potential for the retail business to grow, not in the heart of a city. We are more interested in areas beyond cities, so that we can tap the potential available there. New branches are contributing significantly to the business, especially those catering to MSMEs. This time, MSME loans registered a growth of 11 per cent. We expect that all our branches will lend MSME loans soon. Therefore, we created local hubs that process the applications. We have created 163 MSME hubs region-wise.