In an interview to CNBC-TV18's Latha Venkatesh and Ekta Batra, MS Raghavan, CMD, IDBI Bank said the PSB plans to open 600 new branches this year, which will take its tally to 2,000 branches all over India. "Our plans are in place and we have a detailed plan rolled out for augmenting the CASA, augmenting the priority sector advances which are the need of the hour," he said.
Meanwhile, Raghavan refuted reports of any direct move or discussion to merge United Bank of India with itself. "If that had been there unofficially or officially, we would have definitely gone back to our board and I would have come out because it is price sensitive information. We would not like to do something which will violate the regulations," he told the channel.
Both the banks are public sector entities with government of India having 76.50 per cent and 89.47 per cent stake in IDBI Bank and United Bank of India respectively.
Below is a verbatim transcript of the interview on CNBC-TV18
Latha: We spoke to the banking secretary earlier today and he said that merger talk is preliminary. Can you tell us how preliminary they are? Have you been asked to look at buying up United Bank of India?
A: There have been lots of talks and discussions in various forums about the need for consolidation of various public sector banks. In the recently held meeting of the chairmans' of PSU banks, there was a broad discussion on the contours that can come about and the merger of banks and all that.
But not a single time there were any discussions of merging any particular bank with the other, nor have we received any such circulation. We saw report in the newspaper saying that the bank has been asked to merge — United Bank of India with us. There are no such moves, any direct moves, as of now. However, going forward, if anything is there we will definitely go to our board, take permission, and come to tell you.
Latha: The banking secretary did say that the Government of India, as a shareholder, wants IDBI Bank to have more branches. They think for a PSU bank of your size you all don't have enough branches and that is needed. Even unofficially were you asked to take a look at United Bank?
A: It was a felt need for the bank of our size having mentioned commercial banking space, it is imperative that we have the critical mix of branches and we had 1100 branches when I joined the bank. Last year, in six months we added about 305 branches making the branches to 1400 at the end of last year. This year we are planning to open 600 more branches. Our plans are in place and we have a detailed plan rolled out for augmenting the CASA, augmenting the priority sector advances which are the need of the hour.
Given a chance at some point of time if there is a need then we will definitely look into it and we will consult our board.
Latha: But unofficially were you told to look at United Bank?
A: Not yet. If that had been there unofficially or officially, we would have definitely gone back to our board and I would have come out because it is price sensitive information. We would not like to do something which will violate the regulations.
Ekta: How easy is it for a merger process to take place for example what would the opposition be like and I ask you because there was a merger which IDBI Bank had undertaken all the way back in 2005-2006 which was with United Western Bank. When that took place what were the problems that you faced?
A: That was the merger of a private sector bank with a public sector bank. There are host of differences, the structure is not homogeneous, we had different types of cultures in place and it was a rather painful exercise. It took about two years to settle down and then it had put the clock back at least a year or so.
But here when merger is talked about in PSU banks, all the PSU banks are almost having identical cultures. If you see the top line, if you see the CEO and deputy CEO namely the executive directors and chairman MD of various other banks, government has succeeded in probably harmonizing the culture of most of the PSU banks in the past.
So going forward there will be resistance, there will be lots of pinning points and lots of things to be sorted out but I don't think it is going to be as painful as it used to be in the past.
Latha: Aren't you personally worried that if you look at United, you will get a bank that has a lot of NPLs?
A: I don't want to talk about any particular bank because I have not thought about it because it has not been offered to me, nor am I looking it from the angle of merging with IDBI. So I have not looked at any bank.
All the banks are almost identical in their stress levels or in performance levels, so there should not be any problem for any bank.
Ekta: What is your fund raising requirement this year and any plans or any progress in terms of divestment of any of your noncore holdings?
A: We were looking at divestment of our noncore holding. Last year also we kept the Care Holdings on the block and last moment we backed out because the price expectations were very low and we were not able to sell it.
But this year the same price same shares we were expecting a price of about Rs 900, this year it is quoting around Rs 1200. So we are looking for opportunities but I would not put a date in place. As and when required we may.
Latha: Possible this fiscal you think?
A: Quite possible but we are not certain that it will happen.
Ekta: In terms of your immediate capital requirements how are you going to fund it because we do understand that you had a nod to raise around Rs 4000 crore via QIP?
A: Yes in effect our tier I capital common equity stood at 7.78 percent on March 31. So for every practical reason this is above the comfort level, there is not immediate strain in our requirements as of this year. This year we need about Rs 3000 crore as common equity and around Rs 2000 crore as additional tier I going forward with our expansion plans that we have in our business.
For this we have applied to government of India requesting them to permit us to adopt any of these routes, QIP or public offer, to divest government stake and bring it down to 58 percent. This will give us easily at the present market rates it should give us around Rs 4000-4500 crore which will take care of our requirements this year common equity and next year also.
Latha: So are you hitting the market say in the first half itself before September 30?
A: I am not sure, may not be immediate but I am quoting now at may be 75 percent to price to book is about 75 percent. So I would prefer to wait a little more.
Latha: What about infrastructure bonds, have you put in your plans?
A: Yes we are working in that direction, very soon you can hear something from us.
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