Are there any chances that the bank interest rates would be coming down in the short term, as has been widely anticipated?
There are two issues in that. One, the consumer price index (CPI), which reflects the price of essential goods, is still at 10.54 per cent, which is pretty high. Second, small savings are offering 8 per cent interest on deposits. If the banks go below that, there is a possibility that deposits will shift from banks to post offices. These are two factors that are coming in the way for further reduction in interest rates.
During the third quarter, profitability of Allahabad Bank was not a highlight in its performance. Why was it so?
If you look at our net profit for Q3, it has merely grown to Rs 369 crore from Rs 365 crore, in the face of it. But if you look at the operating profit, it has improved substantially by 28 per cent, to Rs 666 crore, from Rs 521 crore in the year-ago period. The net interest margin at 3.24 per cent was also the highest during the quarter.
These are enough indications that the fundamental areas of banking has remained strong and posted a good performance. The net profit was down due to mark-to-market provisions that we did during the quarter.
What is the latest status of your NPA recovery?
Our NPA (Gross) is at 1.93 per cent as of now, compared to 2.06 per cent in December 2007. Net NPA is 0.82 per cent as of now, compared to 0.67 per cent during the same period..
Despite the strong reversionary period that we are going through now, do you still intend to expand strongly?
We currently have 2,327 branches, of which 65 per cent of them are predominantly in the rural and semi-urban areas. We will continue to expand our branch network as we had planned it earlier. We have licence to open 62 branches in our hand at the moment. So far as our overseas operation is concerned, we have a full-fledged branch in Hong Kong and a rep office in China but their contribution to our balance sheet is still very low.
You have been hiring people in these turbulent times? Why are you doing that when companies are laying off manpower in a big way?
See, we have a lot of staff retiring and we are expanding our branch network. We need to have a basic manpower requirement to do this job. Moreover, we have entered into a lot of new activities like setting up a cash management cell and trading of gold coins, for instance. For this we need people and recruiting them is often a long drawn process and then you have to train them.
This will take about eight to nine months. We will be recruiting about 2,000 people and we have initiated the process already.