Date:12/05/2005 URL: http://www.thehindubusinessline.com/2005/05/12/stories/2005051202030600.htm

Back Vijaya Bank to focus on retail, farm lending

Our Bureau

Mr M. S. Kapur, CMD, Vijaya Bank, presenting the dividend cheque to the Finance Minister, Mr P. Chidambaram, in the Capital on Wednesday.

New Delhi , May 11

VIJAYA Bank has decided to concentrate on its retail and farm credit portfolio to push future growth, according to the bank's Chairman and Managing Director, Mr M.S. Kapur.

"The future lies in retail and farm credit. We will try to concentrate on expanding our credit portfolio in these two sectors," Mr Kapur told Business Line.

He said that, contrary to popular notion, farm lending is proving to be profitable for the banking sector. "The repayment record of farmers is generally very good," he said.

Mr Kapur said Vijaya Bank had been concentrating on increasing farm credit even before the current thrust on such kind of lending by the United Progressive Alliance Government.

"We had internally set ourselves an annual growth target of 70 per cent. We achieved an increase of about 60 per cent during 2004-05 over the previous year," he said.

Mr Kapur was in the Capital to present a dividend cheque for 2004-05 to the Finance Minister, Mr P. Chidambaram.

The bank paid a dividend of Rs 23.35 crore, representing the Government's share of 10 per cent final dividend declared by the bank, with the year's total dividend working out to 25 per cent.

Mr Kapur said corporate lending is proving to be a drag on banks in general, with companies beginning to become more demanding on interest rates.

"For several years now, I have been concentrating on credit portfolio growth, but not on corporate lending. Ever since the RBI allowed sub-PLR lending, companies have started looking for rates which often do not suit the banks," Mr Kapur said

Mr Kapur said he planned to increase the bank's branch network to 1,000 by the end of the current fiscal from 900 branches.

"We plan to grow aggressively this year. Last year, we opened three regional offices at Chandigarh, Udupi and Shimoga, while we added 50 branches. This year, we would expand with greater vigour," he said.

Mr Kapur said he was not looking at closure of the bank's loss-making branches, but instead would try to tone up their functioning to turn them around.

"I don't believe in closure of loss-making branches since these do serve some people. Closure would give hardship to the customers. Instead, I am looking at making them profitable in the future," he said.