Aim to maintain credit-deposit ratio between 78-79 per cent: Bank of India MD

This is a conscious call that bank has taken in Q1FY25. From April 2024, our focus has been to ensure that deposit growth outpaces credit. Even today as we speak, deposit growth from April 1 onwards has been higher than credit growth. We are very conscious that we must maintain credit-deposit ratio at an optimum level of 78 per cent to 79 per cent. This is also desirable level as per the Reserve Bank of India’s (RBI) regulatory guidelines on SLR and CRR as well.

The bank’s board has approved raising ₹5,000 crore via tier-I and tier-II bonds and we will raise the same in H2FY25. Separately, we already raised ₹5,000 crore through ten-year infrastructure bonds in July, at 7.54% coupon rate, and the issue was oversubscribed by three times. Looking at the response, we will most likely raise another tranche of ₹5,000 crore of infrastructure bond in September.

Essentially, this is to keep pace with the growth of resources. Credit growth, on a year-on-year (YoY) basis, for our bank and the entire industry is higher than deposits. So, how will this gap be bridged? At our bank we have raised infra bonds. Secondly. we are unwinding some excess SLR, and we have also borrowed from a couple of financial institutions, so these are avenues beyond normal deposits to sustain credit growth. Last couple of months, we are also raising certificate of deposit, which is another good source for cheap deposit.

As far as ECL, project finance or LCR draft guidelines are concerned, it is our in-house view that these steps are in the right direction. The simple reason is that all banks are doing well presently and we are showing good profitability. If you see, PSBs posted more than ₹1 trillion net profit in FY24. So, adequate profitability is there, operating profit is good, balance sheets are healthy, provision coverage and asset quality is improving. It is the right time to have additional provisions for any future shocks. That is the intent of the RBI also, and the regulator has given adequate time to meet requirement of higher provision…

Corporate loans have grown 15.45 per cent in Q1 YoY. We have around ₹40,000 crore of overall loans in pipeline, of which corporate loans account for ₹30,000 crore – ₹35,000 crore. We are very aggressive on infra where we have road, port projects. We are focusing on renewable energy—solar and wind. Ethanol funding, green solar cell manufacturing plants, warehouse, data warehouse funding also has a lot of scope. In traditional sectors, we are very much into the PLI sectors where lot of capacity is being created in cement, textile, coal mining, pharma, oil companies, among others.

We have a three-year road map wherein retail, agriculture and MSMEs will have 55 per cent share in overall advances and corporate the rest. Overall, from a three-year perspective, we want to take the bank’s overall business to over ₹18 trillion. Of this, deposits would be around ₹10 trillion and advances the rest, with a CD ratio of 78-79 per cent, and CAGR of around 12 per cent.

Our SMA (special mention accounts) above ₹5 crore ticket size was at ₹9,654 crore in Q1FY25, higher on a quarterly basis but lower on a yearly basis. Further, 85 per cent of overall SMAs are in the SMA-0 category, which means SMA-1 and SMA-2 constitute only 15% of overall SMAs. Many times, borrowers pay and loan gets rolled back. In Q1FY25, I would say entire industry saw tough SMA position due to reasons including election period, officers being placed on election duties, and in Q1 a lot of promotions and transfers also happen. Further, there were heat waves in North and Western parts of India which impacted collection efficiency. Overall, we aim to lower GNPA ratio to around 4 per cent by March 2025, and net NPA to 0.90 – 0.95 per cent. Our slippage ratio and credit cost will improve further. If there is a ₹100 slippage, the task for the field is they have to double the recovery and upgrades.

When we are doing lateral hiring, it is a very personal issue. We come up with an advertisement and a person may apply for that position. If the bank appoints a person after following due process, and if the person does not like the work or job profile, definitely they will leave. So we as an organisation, and the incoming person have to match frequency level. There are cases in PSBs where lateral hirings have done exceedingly well, wherein employees continue to remain and grow with the organisation. But, a few examples exist, where officials have remained for small period and left due to personal reasons. So, these are personal choices each individual makes, because the organisation will finally remain. It is not that employees remain in private sector also, a lot of churning keeps happening in all organisations—both private and public. In fact, attrition rate is quite high in private sector.