Bank of Baroda's loan growth seen at 20% in FY20, says executive director

Bank of Baroda (BoB) has cut its deposit rates by 25 basis points (bps) across tenors. Vikramaditya Singh Khichi, executive director of BoB, spoke about the deposit rates as well as the merger of Vijaya Bank and Dena Bank with BoB.

“We thought this would be an opportune time to look at cutting down or bringing down the deposit rates primarily because of two reasons. Till 2019, the credit growth was outpacing the deposit growth by a very big margin. If the credit growth was around 14 percent, deposit growth was around sub-11 percent which has now moderated to around 12 percent and deposits continue to grow at 10 percent. Secondly, Reserve Bank of India (RBI) in its last monetary policy has changed its stance to accommodative thereby bringing a lot of liquidity in the system,” Khichi said on Tuesday.

On the loan growth, Khichi said, “We are looking at 20 percent plus in the entire credit loan book. We have been achieving that for the last six consecutive quarters and this is what we have as an aspiration for the coming year also.”

On gross non-performing assets (NPA) ratio, Khichi said, “For the last six consecutive quarters, we have been seeing an improvement in our asset quality. The gross non-performing loan (NPL) has gone down less than 10 percent and net NPAs are 3.3 percent. As for the consolidated entity, as on April 1, we are on a similar platform and going forward, we are looking at a much better result than this.”

“Other banks have not brought down the deposit rates till now whereas we have done it. Being the second-largest bank in the public space, definitely, we are expected to take certain initiative. I understand yesterday HDFC Bank has slashed their deposit rates by almost similar margins, 25 bps. I expect the same thing by other banks also over a period of time,” he further mentioned.

In terms of asset quality, he said, “We are already comfortable with provision coverage of around 78 percent plus. So I don’t foresee any problems in times to come because even if we see a few surprises here and there, we are adequately buffered for the recovery. The asset quality should remain comfortable for us.”