“So, for us, the current account and the saving bank has been quite encouraging. We have ended the year above 50% of CASA,” says Baldev Prakash, MD & CEO, J&K Bank.

Let us first understand how things are stacked up because last couple of quarters have been tough for the entire sector per se. Liabilities have been low, demand has been high, and everybody in a sense wants that saving account from the customer who is invested in stock market and not putting money in banks. What is happening in your business?
Good thing is that the Q4 for us, as far as liabilities is concerned, has been quite encouraging. Two things, one that the normal inflow of government deposits, that has been as per our expectations. And besides that, we have been quite aggressive as far as QR code distribution is concerned to the small traders and merchants and that has also given a fillip to our current account. So, for us, the current account and the saving bank has been quite encouraging. We have ended the year above 50% of CASA. We are almost at that point where you would be also coming out with the Q4 updates. Give us some colour in terms of how the deposit growths have shaped up so far, what the advances have been like.
So, we have actually lived up to the expectations and our guidance which we have given in the beginning of the year. So, deposits, it is two-digit growth, around 10.5% and CASA has been above 50% and advances, we have grown around 14-14.5% on YoY basis and similarly in all other areas, our NPA, we have given a guidance of 4.5% of gross NPA.

We have ended rather better than that. And similarly, net NPA has been below 1%. So, all in all, I think this has been very good year for the bank.

And given also that there has been that announcement recently from the IRDAI mandating insurance to be in the electric form, can you tell us what exactly this would mean in terms of growth?
So, for us, we had two partners as general insurance partners tie-ups, so we wanted to have one more, at least three, so that we are able to give variety as well as the competitive products to our customers. So, we have recently entered into a new tie-up with New India Assurance company. I am sure that will also help in improving our income as well as giving the further choices to our customers.

How much of your current business is coming from only local J&K SME or perhaps J&K based industries?
Around 67% to 70% of business is from J&K. And similarly, for MSME also, the predominant market is J&K. We are dependent upon our rest of India branches, mainly for corporate as well as now they improving the home loan segment in rest of India. So, agriculture and MSME and retail part of the business is predominantly in J&K and Ladakh. Now that is a huge advantage, you have a geographical presence, J&K Bank in a sense is the go-to bank if you are living in that part of the world. But new banks have now also started opening branches there. Do you think this advantage what could be called as business moat, stock market may use this term business moat, will that get diluted?
While we welcome the competition, because it ultimately helps us to improve our services as well as our delivery to the customer. But what we have seen over a period of time, at least I am seeing the last two years, the other banks are there, they are opening the branches. But if you see my market share, we have not gone down even 1%. So, this is a strength of the bank and the major contribution to this strength is the loyalty of our customer. I think that is maintained. And besides that, we have done a lot of good work in digitisation of our services, which is a journey still going on. I do not find much of a challenge as far as new players are coming in our core territory. But rather I am seeing it an advantage that with the digital outreach, we will be able to explore the rest of India market in a much-much better manner.

So, what you are saying is that you are going to diversify into other geographies. Am I getting that right?
Absolutely.

So, anything that you may have identified or targeted in terms of a concentration pocket to start off with geography wise?
Not concentration, but we are looking for the home loan growth, which is available in all parts of the country and this is on the strength of our digital initiatives which is a big strength now for the bank going forward.
We are looking for good home loan book which will be built in the major centres. And similarly, corporate book, which we have been already focused on, that will also get a further fillip.

What about your deposits? You also have an advantage because of local presence. Anybody who wants to opens account wo J&K Bank jata tha. Now that advantage also will get diluted. How would you safeguard that your liability franchise and CASA remains at 50%?
No, that liability franchise will continue to be getting further strength. Two things are there. One, that in retail, the presence we are having, more than 850 branches across the small, small towns and villages in our core territory, both J&K and Ladakh, nobody can match it at least in the foreseeable future, that is one.

The other thing is the agriculture sector is looking up now. I am expecting a lot of improvement as far as earnings of farmers is concerned because a lot of new initiatives government has taken, which will improve the income of farmers.

Farmers community, if I say 90%, is with J&K Bank, so that will give a further advantage to the bank as far as the local retail franchise is concerned.

Overall, in the cities, yes, there will be some competition. But on the strength of our loyalty, strength of our customer connect, as well as the services, I am sure we will be able to maintain the market share which is there as of now.

The area where you are, there is a lot of religious tourism, which is picking up. There is a lot of religious tourism which is also now picking up in other parts of India. I understand that you have got very big plans for religious tourism if I am right?
Yes, so all type of tourism, religious tourism is also picking up and it will further get a new fillip when the connectivity through rail network will improve with J&K.

So, as of now, I think another three months or so we will have a direct train connectivity with rest of the country. This will further also improve. Then, besides that, a lot of other tourists are coming now in Kashmir particularly. So, going forward I think days are good for us.

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