 "R Koteeswaran")
The Reserve Bank of India has initiated corrective action on Indian Overseas Bank (IOB), restricting branch expansion and recruitment. Managing Director and Chief Executive Officer R Koteeswaran tells Gireesh Babu the bank has recovered sizable non-performing assets (NPAs) but it will take some time for a turnaround. Edited excerpts:
What restrictions has RBI put on IOB?
RBI has implemented prompt corrective action, based on some triggers. The idea is to see that we shore up our bottom line, which is hitting us badly because of NPAs. We need to take the necessary steps to shore up the bottom line. RBI has asked us to reduce bad loans and improve the current account and savings account deposits (Casa).
In fact, even before the RBI move, we have been on the same track. We have been doing sizeable recovery, harping on NPA recovery, revision of slippages and increasing Casa deposits. We have been working on increasing the share of retail. From January this year, we have been on the right track, on which RBI wants us to tread. So, there is nothing special in that. The only thing I would like to clarify is there is no embargo or restriction on any banking business.
How will these measures help the bottom line?
We are on the job. It's not going to so easy because of the economic conditions. The ground is not conducive enough for us to effect a recovery at the desired pace. But we are on the job and we have recovered a sizeable amount in the past quarter, compared to the previous quarter. During the first quarter this year, we made a recovery of more than Rs 800 crore. In the subsequent quarters, we could not do it for various reasons, such as many promotions and transfers, a severe summer and other activities such as the Jan Dhan Yojana. It is unfortunate that before we could achieve something, this has come and hit us. We need some time to turn around.
When do you expect the turnaround to happen?
That depends on many factors. It might happen beyond the plan, too, if the situation turns around. We are making an excellent recovery. We will come out with the numbers as and when these are out. But the ground reality is totally different. We are yet to see a turnaround in several sectors.
You are raising about Rs 2,000 crore from the government. How will that help?
Our capital adequacy ratio will help us increase our capital to a great extent. That will enable us to lend more rigorously, especially towards more retail and small and medium enterprises. From January this year, we have taken a conscious decision not to expand in the corporate segment because our corporate book is a little high. We want to grow on the retail and SME side, where we are focusing on; the entire workforce is geared up to sell more of our products. In fact, we were the first among public sector banks to come out aggressively with a very good base rate. We reduced it to 9.9 per cent at a time when others' rates were 10-10.25 per cent. We are doing the job and we have to wait and see how things turn around for us.
