Bangalore-based public sector, Vijaya Bank is expected to record a slow growth in its deposits as well loans disbursement for the current fiscal ending on March 31st, 2009. The bank has been going slow on disbursing new loans due the risk of rising default in the current scenario.

Commenting on its fresh loan disbursals, Vijaya Bank's Chairman and Managing Director Albert Tauro said, "We are not very aggressive but neither are we seeing a lot of NPAs. However, some of our accounts are in the special watch category and we are closely monitoring these loans."

The Chairman revealed that earlier the bank had targeted a total business of Rs 1 lakh crore for this fiscal but due to the slowdown it is now likely to reach only to Rs 92,000-93,000 crore. Therefore the bank's deposits are expected to grow by only 16% to18% compared to 21% earlier and growth in advances will decrease to 20% to 22% from 30%.

Mr Tauro said, "There has been a deceleration in growth rate across the banking sector. Our focus will be on increasing profitability. We will also reduce high cost deposits and increase our CASA (current accounts and savings accounts) base."

The bank's focus for the next fiscal would be to increase profitability and raise capital. The net interest margin (NIM) during December 2008 improved to 2.35% from 1% and the net interest income rose by 61% in third quarter.

The bank has also received 89 fresh approvals to open branches during the year. The bank believes that its CASA would increase with the opening of new branches. "The branches will be opened in Haryana, Punjab, Andhra Pradesh and Maharashtra," said the Chairman.

Mr Tauro informed that some of the business segments are also under pressure. "There is some pressure on asset quality, in the home loans and SME segments. We are closely monitoring the accounts in these two segments," he said.

Meanwhile the government is also going to infuse a capital of Rs 1,200 crore to help the bank to maintain its CAR at the mandatory 12%. The bank is expected to receive around Rs 500 crore, by the end of March 2009 as a first round of infusion.