How Punjab & Sind Bank plans to boost deposits

'We are targeting good quality current and salary accounts.'

State-owned Punjab & Sind Bank is targeting salary accounts to boost the share of low-cost deposits.

Swarup Saha, managing director and chief executive officer of the New Delhi-based lender, tells Manojit Saha that the bank may see gross non-performing assets (NPAs) fall below 8 per cent if there is resolution of the stressed assets.

What is the overall loan growth target for the bank in the current financial year?

Earlier, we gave guidance for loan growth of 15 per cent in this financial year.

Till the September quarter, the loan growth was 9.2 per cent year-on-year.

We are sticking to the guidance of 15 per cent overall credit growth target.

That will be driven primarily by retail, agriculture and MSME (RAM) segments, for which we are targeting 20-22 per cent growth.

We are targeting a growth of 7-8 per cent in corporate loans.

Is it a conscious strategy to go slower on the growth of corporate loans than the other segments?

A bank of our size with advances of Rs 74,000 crore needs to balance the portfolio very judiciously.

In the past, when the bank was going through a cycle of high NPA and losses, it took a conscious decision to move away from the corporate segment to primarily the RAM segment.

Earlier, the ratio was 55:45 in favour of corporate; now we are rebalancing the portfolio and reversing it.

After coming out of four years of losses, we want to grow qualitatively.

After posting a profit of Rs 1,039 crore in the last financial year, we want to maintain the momentum.

While loan growth was 9 per cent, the deposit growth was only 3.2 per cent. What are the steps taken to boost deposit growth?

We are bringing in more and more customised products on the deposit side.

We have created new fixed deposit products for 301 and 601 days, with competitive rates of interest.

The other area that we are focusing on is the acquisition of salary accounts.

Our CASA (current and savings account) ratio is traditionally the lowest in the industry.

We are building it up.

From 30 per cent in September 2021, we have moved up to 33.56 per cent.

We intend to take it up further.

We are also targeting good quality current and salary accounts.

We have tied up with the Municipal Corporation of Chandigarh for 10,000-plus salary accounts, which we have already opened.

We have also opened 14,000 salary accounts for Nagar Nigam, Lucknow.

This has happened in the last two months.

We are looking at 10-12 per cent deposit growth for the current financial year.

Punjab & Sind Bank's margin was 3.06 per cent in Q2. Since fixed deposit rates are rising, will it be possible to sustain such levels?

Yes, right, that is why we have given a conservative net interest rate margin guidance of 2.9 per cent for the full year.

On a half-year basis, we are nearly at 3 per cent.

There could be some impact.

If we can increase our other income, we are confident that we can be at 2.95 per cent.

While asset quality has improved, gross NPA ratio is still high at 9.67 per cent. Are you planning to sell NPA to NARCL (National Asset Reconstruction Company Ltd), which will bring down the stock of gross NPAs?

We have identified seven accounts amounting to Rs 1,590 crore, which are under discussion.

I hope some of them get resolved in the current quarter and in the next quarter.

We also have some old accounts that are in NCLT, where there is 99 per cent provisioning.

We expect some chunky recoveries in those accounts.

We have kept a guidance on below 9 per cent for the gross NPA; if all the NARCL resolution happens, maybe we can even go below 8 per cent by the end of the financial year.