Bank of Baroda's net NPAs should decline going ahead, says CEO PS Jayakumar
PS Jayakumar, MD & CEO of Bank of Baroda, said the demand for loans is lower than what it was in the previous year and expect it to be in the range of 8-12 percent in FY20.
PS Jayakumar, MD & CEO of Bank of Baroda, said the demand for loans is lower than what it was in the previous year and expect it to be in the range of 8-12 percent in FY20.
In an interview with CNBC-TV18, he shared his views on the merger process, monetary transmission, external benchmarking, net NPAs and slippages.
Talking about the amalgamation process and how banks should prepare for it, Jayakumar said, "Three things stand out. One, is how do we define a new business proposition that shows the amalgamation actually throws a real significant benefit and there is some kind of superordinate goal for people to chase. Two, is people integration and three is technology integration, said Jayakumar, adding that if these three things are sorted out then the merger would go smoothly."
"There are two biggest challenges for the mergers, he said, one is articulating the news business model and two technology integration is difficult," he said.
With regards to external benchmarking, he said, "over a period of time monetary transmission does take place. What we are now seeing is changes in pricing to external benchmark to accelerate monetary transmission, so there could be some challenges with respect to margins but on other hand a lower interest rates and better treasury portfolio gives good room for some kind of catch-up."
“The most important thing from a margin perspective is the kind of dilution that happens because of non-performing assets (NPAs) and as that part of it is managed there is a pick up that is coming in. For certain banks there is an infusion of capital, which helps in preserving net interest rate margins,” said Jayakumar.
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