Q&A: S Raman, CMD, Canara Bank

'We plan to foray into more areas through subsidiaries'

A little over three weeks have passed since S Raman took charge as the chairman and managing director of Canara Bank. But he has already identified the main priorities. In a chat with Manojit Saha, he charts the growth path of the Bangalore-based lender. Edited excerpts:

What are your immediate priorities?
One is to harness technology. In the last few years, Canara Bank had some small issues with computerisation. All those glitches have been removed. We achieved 100 per cent core banking solution from July. We have taken aggressive steps to ensure that customers get the same service through alternative channels as over the counter. We will launch mobile banking soon, which will be of importance in the area of financial inclusion.

 

Canara Bank has not been very active in foreign geographies, unlike some of its peers. Would you like to see more business coming from your international branches?
We have had a few branches abroad for a long time. For example, our branch in London has been in place for more than 25 years. However, their performance is not commensurate with that of other Indian banks present abroad. We have to ensure that our overseas branches become a more important part of the overall set-up. At present, overseas branches contribute three-four per cent to the top line. We would like to take it to seven-eight per cent over the next two years.

We are also expanding our presence in Qatar, Bahrain, Frankfurt in Germany and Johannesburg in South Africa. We want to have a decent expansion overseas. That will be one of our thrust areas.

What are your plans for domestic operations?
We plan to grow domestically in a big way. Last year, we opened 300 branches, and have an approval for another 200, which will be opened in the next six months. We want to strengthen our presence in Uttar Pradesh, Haryana and Orissa, where we are not strong. In addition, we will maintain our strength in our home turf — the four states in South India. We want to increase our market share, which is at five per cent now. Our target is to have a business of Rs 5 lakh crore by the end of this financial year, compared with Rs 4 lakh crore in March 2010.

Canara Bank’s current and savings account deposits (Casa), or low-cost deposits, are lower than its peer banks. How do you plan to improve that?
We have seen some deceleration in Casa because of automatic transfer of savings deposits to fixed deposits. But still, Casa is 30 per cent of the total deposits. We have been conducting campaigns, since last year, to get more savings deposits. We aim to grow our Casa by 30-35 per cent.

Do you see any further pressure on asset quality?
Non-performing assets may show a slight increase but, by and large, there is no major concern. Slippages from restructured assets have been contained at five per cent. On provision coverage ratio, we are comfortable with 78 per cent as of now, as against the regulatory requirement of 70 per cent.

Is there a case to raise deposit rates?
Deposit rates have hardened in the last few months and interest rates have exhibited some upward bias. We are watching the situation and will take a call at an appropriate time.

Which are the new business activities that Canara Bank will enter?
One of the big strengths of Canara Bank is its subsidiaries. The bank has a history of running subsidiaries very successfully. The life insurance subsidiary has crossed Rs 1,000 crore premium since its inception in June 2008. The asset management subsidiary has Rs 12,000 crore assets under management. We plan to foray into more areas through the subsidiary route.

Which are those areas?
At present, we want to keep these under wraps, as the thought process is still on.