The Indian banking industry is going through a phase of business consolidation and introspection. With RBI continuing to raise interest rates to cool prices, a slowdown in demand for loans is expected. This could adversely affect banks’ businesses. Chairman and managing director of Bank of Baroda, MD Mallya, spoke to Hindustan Times on a range of issues. Excerpts:
Interest rates have hardened in the last few months and with the existing inflationary pressure, do you think they could rise further?
The RBI has already underlined the need to control inflationary pressure and there could be some further tightening by the central bank and banks will have to work on that.
What impact would it have on credit demand, especially home segment?
There could be a slowdown in demand for home loans with rising interest rates. But on a year-on-year basis, it would register a growth. Housing loan demand is the highest during festival time and we will have to see how things move in the coming months. Credit for all ongoing projects in sectors like steel and power are going on track, but there has been a slowdown in fresh investments.
What kind of credit growth will banking register this year?
India’s GDP growth is expected to be around 8% as projected by both RBI and government. Considering this, the credit growth is likely to be around 19-20%.
What are Bank of Baroda’s credit and deposit growth projections for the fiscal?
At BoB, we are expecting to register a 21% deposit growth and a credit growth of about 23-24%. This is higher than the industry average.
What are your expansion plans in the overseas market?
We already have 80 offices abroad and are planning to open several more in countries like Uganda, Kenya and Botswana in Africa and a few more in the Gulf. We are also opening a subsidiary which will be a joint venture with other public sector banks in Malaysia. Besides, we have also applied for a licence for a branch in Australia. Currently, we have a representative office in Australia.
Any new initiative in pipeline?
Quite a few. We are planning to launch 24x7 ‘contact’ centres which would be more like call centres to handle all kinds of queries of our customers. In the initial phase, however, these centres would not be open for 24 hours but eventually we would make them operational 24x7. There would be two such centres, one in Lucknow and one in Baroda. The Lucknow centre will be launched next month and then we would open the centre at Baroda. These two centres would handle all customer queries across the country.
We are also planning to rebrand all our branches in the urban markets as BoB Next. These would be more focused on sales and marketing and back-end operations would be handled from other centres. We are also planning five centralised ‘hubs’ to handle all new accounts. We already have five such hubs. However, the know-your-customer norms would have to be done by the respective branches.