IOB targets zero NPA by March 2007

The increase in cash reserve ratio (CRR) by half a per centage point by RBI would not affect the liquidity of Indian Overseas Bank (IOB) claimed IOB chairman and managing director S C Gupta.

RBI has increased CRR from 4.5 to 5 per cent few days back in an attempt to check the price spiral. Gupta was in Kolkata on Monday to launch the bank's gold card scheme in the city. The gold card is meant for exporters with good track record.

Gupta was confident that IOB has enough liquidity to absorb the increase in CRR.

"The increase in CRR would take out around Rs 8,500 crore from the whole banking system. The liquidity of IOB would reduce by around Rs 220 crore. Net impact in our portfolio for this would be around Rs 10-15 crore. But this is not very substantial as our net interest margin is improving. We have also cut down NPA drastically," he said.

According to Gupta, the bank is trying hard to get nil net NPA status by March 2007.

The bank has increased net interest margin from 3.24 per cent in March 2004 to 3.62 per cent in August 2004. The cost of deposit has gone down to 5 per cent from 7.81 per cent.

He pointed out that the share of manufacturing in its advances has also improved marginally in the first five months of this fiscal.

"We have given around Rs 250 crore to manufacturing in this fiscal, which is around 5-8 per cent more than in the same period of the last fiscal. This is mostly in steel industry," he said.

Gupta informed that the bank is going aggressively in the priority sector lending. The priority sector lending of the bank has gone up by around Rs 800 crore in last five months and 50 per cent of this was directed to agriculture.

Commenting on IOBs overseas operation, he said that it is planning to open offices in China, Canada, UAE and Malaysia. The bank presently have five overseas branches.

"We shall start operation in China from March 2005. Infact our overseas branches are doing extremely well," he added.