| Shenoy: Size matters
New Delhi, June 26: Bank of Baroda will acquire a bank in south or east India in order to increase its retail customer base.
“We are open to acquisitions although the process has not yet been initiated,” said P. S. Shenoy, chairman and managing director of the state-controlled bank in which the government holds a 66 per cent stake.
“But we will make a move if any opportunity with a synergetic value comes up.”
In early April, minister of state for finance, Anandrao Adsul, had told The Telegraph that the operations of small and loss-making banks should be merged with profit-making banks.
“The rationalisation of operations would improve the health of the banking system... the finance ministry would soon prepare a report on this,” Adsul had said.
Currently, 97 commercial banks — 27 state-run banks which includes the State Bank Group (8), 30 private sector banks and 40 foreign banks — operate in the country.
Among the state-run banks, the Punjab and Sind Bank, Dena Bank, Indian Bank and Allahabad Bank have reported lower profits. In the State Bank group, State Bank of Mysore and State Bank of Saurashtra have registered lower profits.
Bank of Baroda, the fourth largest bank in terms of asset base, will come up with the next voluntary retirement scheme within two years, Shenoy said.
“We will offer a voluntary retirement scheme after the bank automation process is completed in two years,” he said.
Shenoy also said that the bank was open to the idea of reducing prime lending rate by 0.25-0.50 per cent due to the soft interest rate stance taken by the Reserve Bank.
“There is a scope of a rate cut,” he said. “Higher forex inflows, sliding inflation liquidity and lower credit offtake all point towards a cut in the PLR,” he said.
“But with interest rates falling, there could be pressure on the spreads, which would be on the rise due to certain constraints in the savings rates,” Shenoy added.
“We hope to reduce the cost of deposits to 5.50-6.0 per cent this year from over 6 per cent in 2002-03.”
The bank’s capital adequacy ratio, a benchmark index indicating a banks liquidity, stood at 12.65 per cent against the RBI’s stipulated 9 per cent while earnings per share stood at Rs 26.11.
For the year ended March 2003, the bank has reported a higher profit of Rs 772 crore. Non performing assets stood at a lower 3.72 per cent against the industry average of 5 per cent.