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Centurion Bank gets nod for 15 more branches

Rajalakshmi Menon

Dinesh Narayanan

MUMBAI, Dec. 8

CENTURION Bank has received the Reserve Bank's clearance to open 15 more branches in the current year. The bank plans to use the licences to expand more in the South and the West.

The bank would allocate some branches for the northern region too, according to Mr M.J. Subbaiah, Managing Director, Centurion Bank.

Mr Subbaiah said the bank planned to apply for 20 more licences in the next fiscal. Currently, it had around 35 branches.

The bank has also received the RBI's approval for its capital markets division, which it has identified as a core division, to function as an independent branch.

``Our capital market activity is mainly to provide credit facility to brokers. We have done quite well so far. Our sanctions in terms of overdrafts stand at Rs 480 crore and the guarantee utilisation is around Rs 350 crore so far,'' said Mr Subbaiah.

The bank earns through the current account floats, the guarantee commission, which works out to 1-1.5 per cent, and interest in terms of overdraft. Currently, the bank has 170 brokers registered with it.

The bank had some time ago tied up with brokerages such as Geojit Securities and Kotakstreet.com for online trading. The bank's strategy is to offer payment gateways to these firms.

``We are essentially into commercial banking and we believe it is our core activity. The lion's share of our profits come from that business and one sure way of bolstering it is through organic expansion,'' he said.

``We do not have the money power to acquire banks right now and do not see any suitable merger opportunities as well. It is true that some time ago there was some talk of our merging with a bigger player. But we are not looking at that any more. We'll ex pand our branch network and reach a critical mass before looking at acquisitions,'' he said.

According to Mr Subbaiah, focus on the core business was the main reason for the bank breaking up with the Ardee group and Canada Life with which it had tied up for insurance. It was not looking at another tie-up in that line of business.

``We will not get into risk assurance but will certainly look to add products of other insurers in our retail portfolio,'' he said.

Another area the bank would concentrate on was its already-established channel financing activity. He said that was emerging as a prime business for the bank, especially since the hiving off of car finance into a separate arm. Channel financing was credi t provided to dealers in established brand commodities such as two wheelers and trucks with help from manufacturers.

The bank has earned a net profit of around Rs 24 crore in the first half of the current fiscal compared with Rs 7 crore in the corresponding period in the previous year.

Centurion Bank had a total NPA level of Rs 71 crore as on March 31, 2000, with total write-offs amounting to Rs 37 crore. He the bank hoped to maintain the net NPA level of around 2.7 per cent in the current fiscal as well. ``The provisioning may not be as high as in the previous year,'' he added.