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“Interest rate increase is a derivative of inflation. If inflation gets controlled, perhaps the interest rate scenario will be much more stable,” says Dinesh Kumar Khara, Chairman, .

Let me start by asking about the book. You have seen advances grow 11%. What is your target for the year in terms of credit growth?
As far as our un-availed working capital facilities are concerned, they are almost about Rs 2 lakh crore and almost similar number is there for our term loans which are undisbursed. On the top of it, we have also got the visibility of a pipeline of about Rs 60,000 crore worth of proposals. So overall, there is about Rs 4.60 lakh crore worth of proposals. As I perceive, it is a very healthy pipeline and considering that our corporate book put together is somewhere around Rs 8.10 lakh crore, if this number fructifies, then it is going to reflect in a very healthy corporate book for the bank.

Sticking with the corporate book then. How much is your sanctioned corporate credit book?
There is enough demand in the economy and secondly the growth is also coming from the investment demand which is there from the infrastructure projects being led by the government of India. All said and done, that is going to be the major lever which will bring in more and more spending for investment purposes in the economy.



In addition to that, the kind of focus which is there for PLI will be a major boost for manufacturing. The way our exports are growing, this is a very healthy trend. Overall there are many growth levers in the economy which gives me confidence and conviction that we should see decent growth going forward.

One of the levers that you were looking to improve for the bank was return on equity (ROE) which stood at 13.92%. You have set a target of 15%. When do you think that will be achieved?
I think we have given the guidance for 2024 but I expect that by 2023, we should be somewhere nearer to that.

That is positive news certainly. Let us talk about the implications of the RBI’s latest move, the CRR hike. Do you anticipate that the bank will have to raise more capital considering the expected growth apart from the $2 billion that was already announced?
: I do not think so because these are two unrelated subjects. One, CRR is something linked to liquidity. We already have surplus liquidity. So, part of it will be pre-empted and the other pieces when it comes to the capital essentially has a growth purpose. As of now, the kind of capital adequacy ratio which we have can easily support 10-11% kind of a growth but we will be very closely watching the scenario in terms of growth and we will ensure that the capital is not a constraint when it comes to growth of the bank.

One of the worries in a rising interest rate situation is slippages because the pressure of higher interest cost comes in. What is the expectation in terms of this quarter and the rest of the financial year with interest rates expected to go up even further?
We expect that the slippages should be down but yes, of course, it is something which we will have to very closely monitor as we are doing now.

Let me ask you about the asset quality. We have seen that the NPAs are now down to 4%. What is the outlook on asset quality and the expectation on recovery?
Asset quality we would like to see at least at the same level if not improved.

How do you see the interest rate scenario developing? We are talking about this at a time when CPI has come in at a significant high. In fact, since May 2014, it is the highest number. How will this impact the bank? Do you anticipate that NIMs will improve further in this high interest rate scenario?
As far as inflation numbers are concerned, this is a function of multiple variables and a major component is fuel-led inflation and also the edible oil-led inflation both of which are essentially on account of the imports which we are having. Going forward, how these two very important factors behave will probably give the trajectory for inflation. If you really ask me, interest rate increase is a derivative of inflation. So, if inflation gets controlled, perhaps the interest rate scenario will be much more stable.

What is the outlook on NIMs? We are talking about a situation where we could see interest rates go up quite significantly over the next year or so.
Normally, there is always a lag between the deposit rates increase and that leads to a situation where the loan interest rates might start moving faster as compared to deposits. This will have a positive impact on the NIMs of the bank.

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