Reclassification of capital markets portfolio would aid market growth

TM Bhasin,the new chairman and managing director of Indian Bank,has more than three decades of experience in the banking sector.

TM Bhasin,the new chairman and managing director of Indian Bank,has more than three decades of experience in the banking sector. In an interview with Suneeti Ahuja Kohli,Bhasin talks about a host of issues,such as the need to relax exposure norms of banks investment in capital markets,expectations from the RBIs annual policy review and expansion plans for the bank. Excerpts:

What are your expectations from the RBIs annual policy review?

We are likely to see a few new things in the monetary policy. There are a few things that are on the radar of the central bank. Inflation,of course,tops the priority list,followed by infrastructure. RBI will announce some plans to step up infrastructure lending in the country. Then there might be a something for exports and financial inclusion. These are the four things that are getting focused on all the platforms.

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Some banks are suggesting that RBI needs to relax the exposure norms of banks investment in capital markets.

Yes,this is indeed one of the suggestions. It is primarily because a lot of things have been clubbed in capital markets exposure. The idea is to either increase that kitty or reclassify the things that we are adding in that portfolio. This sort of classification will be healthy for capital market growth. A healthy capital market supports the economy. Also,it will be able to support the market in terms of greater participation in IPOs and the disinvestment programme of the government. All these things need some contribution from the banks. I think we need to expand the market to make sure that we have equitable contribution from all and the risk is also diversified.

A lot of talk is going on about financial inclusion. What are your plans?

We have prepared our plan and presented the same to the board. About 15,000 centres across India have been identified for financial inclusion. This will be completed by March 2012.

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What are your expansion plans for the current financial year?

As on March 31,2010,we have reached a total business figure of Rs 1,51,000 crore,which comprises Rs 1,45,000 crore garnered from operations in India and Rs 6,000 crore from our two branches abroad one is in Singapore and the other in Colombo. During the current financial year,we plan to achieve a total global business target of Rs 1,83,000 crore. Of this,Rs 1,75,000 crore will be from our Indian operations and the rest Rs 8,000 crore from operations abroad.

In terms of branches,we have 1,754 branches operating in the country and two abroad. We plan to add 190 branches during the current financial year and about 220 branches during the next year.

Do you require a capital injection from the government?

We are very comfortable at 13.28 per cent CRAR and there is a lot of headroom available in tier II. So as of now,there is no requirement of a capital injection and in future if we need more capital we will go for a follow-on public offer.