`The smarter ones will survive'

Michael Bastian, the Chairman and Managing Director of Syndicate Bank, who has been overseeing the bank's turnaround, spoke to Ravi Sharma about the changes in the banking regime and the bank's area of focus.

The credit off-take has been sluggish.

Yes, the credit off-take has been slow. There are no new industries, no expansions. But that usually happens during the first financial quarter. People generally like to first use their own funds before borrowing from the market.

The cost of funds has come down. How do you view the new sub-prime lending rate (PLR) regime?

Yes, the cost of funds has come down and today banks can lend at sub-PLR rates. Banks now have the freedom to manage their own affairs, but you have to pay for that freedom. As I see it, banks do not need a regulator. Banks should be allowed to operate in an environment that is totally free, not partly free. For example, the remuneration of the top management should be left to the respective banks; right now a horse and a donkey are compensated equally. We at Syndicate Bank are upgrading our internal and external ratings. Our intimidation cost is going to come down once our VRS expenditure is absorbed. We will have a saving of Rs.150 crores.

After a few bad years, Syndicate Bank has recorded a profit of Rs.344.13 crores. Has the bank turned the corner?

We should pull through. Currently our programme is for organic growth and branch expansion. We are concentrating on marketing our products and opening new branches. Computerisation has also meant fewer man-hours for routine work. We are redeploying people, using them for marketing assignments. We have also discovered, thanks to computerisation, that branches need not be 5,000 square feet.

So marketing and growth is Syndicate Bank's current area of focus.

Yes. We are looking at growth in both deposits and advances, and then to sustain this growth.

Is home loans a priority area for your bank?

Yes, it is a priority area. We did over Rs.500 crores of business in this sector during the last financial year. For the bank it is a secured advance. Even the Reserve Bank of India has reduced the risk weight assigned for residential housing loans from 100 to 50 per cent.

How do you view the competition among banks today?

Those who are smarter will survive.