The Hindu Business Line : Canara Bank to expand global operations

To begin with, the bank has entered into an understanding with Sberbank, the leading savings bank in Russia, for cooperation in all areas of banking, according to Mr V.P. Shetty, Chairman and Managing Director. Canara Bank is already in operation in Moscow in joint venture with State Bank of India.

Mr Shetty told Business Line that the bank has sought permission to open a representative office in China. At the same time, it is awaiting the necessary licence to convert its representative office in Hong Kong into a full-fledged branch.

Besides, the bank is looking into the possibilities of opening branches in the Gulf and some other countries.

On the proposal for merger of public sector banks, Mr Shetty said the matter was still being talked about, especially in the media. However, consolidation of the Indian banking industry is necessary to integrate it with globalisation and enable it to stand up to competition in the international arena.

The banks have to face competition in domestic operations also from foreign banks. In this scenario, the banks have to ensure a minimum size of assets and capital. Since there are limitations for raising the capital from the market, one of the ways to achieve the minimum required size is by merger of the banks.

On the preparedness of Canara Bank to implement Basle-II norms, he said it was already ahead of many other banks in matters such as inspection and audit and assessment of credit risk. It also has in place a time-tested and established credit rating system, which will be further strengthened.

In the area of market risk, the bank has tied up with computer and software companies to equip itself with a system to assess the risks and integrate the operations. As for operational risk, the Reserve Bank is yet to define the approach and the bank is awaiting the guidelines from the central bank.

Mr Shetty said there would be higher capital requirement under the Basle-II norms. The Canara Bank's capital adequacy was at 13.9 per cent as at the end of September and the bank has no immediate plans to tap the market.

He said the bank would assess its capital position after completing the balance sheet for 2005 and decide whether further capital was required and if so, when to go to the market.

On Canara Bank's expected performance in the current year, he said the overall profitability of the banking sector as a whole was under pressure with the interest spread getting narrower. Also, the treasury profit is tapering off and the banks are looking for other avenues to recoup the position and maintain the profit levels of the previous years.

However, the advances are picking up and the interest income from this is expected to make good the deficit in non-interest incomes.

On the question of merger of the regional rural banks sponsored by Canara Bank, Mr Shetty said the South Malabar Gramin Bank in Kerala was very strong and would continue to operate as such.

However, the bank is considering merger of its four RRBs in Karnataka into a single entity. Similarly, the merger of its three RRBs in Uttar Pradesh is also on the cards. The bank's board will take a decision in this regard shortly and then approach the Centre and the respective state governments for approval.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Forex reserves vault by $3.79 b, touch $130.7 b

Shriram bets big on chit client base for insurance business

Canara Bank to expand global operations — Ties up with Russian bank

Gross bank credit up by Rs 10,792 cr

91-day T-bills auction