Canara Bank has assured that there will be no retrenchment following its merger with Syndicate Bank, as announced by finance minister Nirmala Sitharaman last week. The bank’s MD & CEO RA Sankara Narayanan told ET Now that there would not be any loss of employment and the synergies will result in better productivity.
Talking about the effect of the merger on the asset quality front, Narayanan said that the combined net non-performing asset (NPA) ratio of 5.62% is well below the 6% target fixed by the Reserve Bank of India (RBI) for PCA (prompt corrective action) banks. He said that the gross NPA ratio of the combined entity was relatively higher at 9% but it is expected to improve in the future with proposed growth as well as likely resolutions in major accounts.
“I am confident both the ratios in an amount as well as a percentage will be much better going forward because we have dedicated teams for various segments including recoveries which will result in better performance by combined entity,” Narayanan told ET Now.
Narayanan also ruled out the need for any immediate regulatory or growth capital for Canara Bank and said that the government’s additional capital infusion of Rs 6,500 crore will help the combined entity achieve quality credit growth. “Whatever projections we have given for both the banks will continue to happen irrespective of this amalgamation process,” said Narayanan.
The Canara Bank chief also confirmed that the bank is in advanced discussions with various fund managers on the sale of its subsidiary CanFin Home. “…we are in discussions with various fund managers on CanFin Home and decisions will be taken at the appropriate time depending on the premium and valuations we get,” said Narayanan.