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said to ET now.
Excerpts edited:
What is your reaction now that you are going to absorb the bad debts of a weaker bank like Dena Bank? How do you plan to deal with this mega fusion?
The government is the largest shareholder in the three banks and the combined entity will solve the problem of lending in all banks. Otherwise, the infrastructure of some banks would not have been possible. It will be a dead investment for the bank.
Through this, the efficient use of rising debts and assets will be possible. It is the number one. Second, the efficient use of resources will result in improved GDP, better credit growth and better growth prospects for the merged entity.
I am positive on the merger issues and very confident that the combined entity will have better growth prospects than the other two lenders and that it will have a positive impact on the Indian economy.
What are the states and regions where you are present and after the merger, what synergies and branch presence do you see coming?
Baroda and Dena have essentially more branches to the west and north. We have more branches in the south. Thus, this will provide excellent reach to the entire Indian entity.
How long will this fusion process last exactly? Do you expect resistance from your employees?
First, the decision must be made by the respective boards of directors and, of course, the largest shareholder is the government and they suggested going there. The second is the chronology. The complete merger can take between four and six months, as in the case of the State Bank of India.
Third, in the long run, it will improve the customer base, the business, the experience, the exposure, the skills and the potential gaps.
At the top level, in all banks – ED or MD – we move from one bank to another without effort. We settle the next day. For a few days, we can think of our former bank, but frankly, in the public sector banks, whether you are sitting at Bank of India or Bank of Baroda or Dena Bank or Vijaya Bank, it's all the same. Asset-liabilities, product pricing, everything is similar. You can have two or three different people and that will be easily adjusted. Our jobs are transferable and we meet new people every day, every year. I do not think it will be a challenge for a bank.
Do you have a clear idea of the role you will play in the merged entity?
I've been appointed by the government as the managing director and the government will take a call that will hold what position and we are ready for anything that could be in the interest of the merged entity.
Tell me what the combined stress assets would be and what the combined recoveries might be?
The combined bank has a total business mix of about 15 lakh crore. Whatever the numbers you see since June. From June to September, Vijaya Bank's growth was very positive. The number two, the NPAs is not so alarming and the number three, all together to manage a bank of Rs 7 lakh crore advances, the management of Rs 80,000 crore NPA is not a problem at all.
In gross terms, it is close to 10%. In net terms, it is around 5%. It's very handy. I am certain that with traditional focus on specific areas, we can certainly improve recoveries and increase the CASA combination to 35% for the sector. This will allow us to better evaluate the products.
How much capital does the merged entity need from the government?
The combined entity has more than 12.5% of the ratio CRAR (risk capital (weighted)). In the current context, this is fair enough for regulatory compliance, and the government has also pointed out that it would provide additional capital for growth as and when needed. We do not expect any problems with capital and liquidity.
Many people in the market believe that this combined entity is only reversing the recovery of some of the biggest banks like Bank of Baroda. What would you say to them?
From Vijaya Bank's point of view, I can say that we are absolutely on the right track. We will add value to the combined entity, no matter how we need our experience, our exhibits or our skills.
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