ICICI Bank [Get Quote] had a tough second quarter, with its consolidated net profit down by over 27 per cent to Rs 651 crore (Rs 6.51 billion). After the results, the bank's Joint Managing Director and CFO Chanda Kochhar spoke to Business Standard. Excerpts from the interview:

At the end of the June quarter, you had said it was the toughest one. This quarter seems to be worse.

I do not think so. The core operating profit is higher, the fee income has increased, the operating expenditure is under control and the specific provision for NPAs (non-performing assets) is Rs 10 crore (Rs 100 million) lower. We are watching the global environment and it will take some time to recover.

On the positive side, the regulators are proactive and every government is taking steps (to check any adverse impact). In India, there is a concern about liquidity. With lower inflows, there is a lot of pressure on liquidity, but a 7 per cent (GDP) growth is likely.

Can you tell us about your overseas exposure and what is the strategy, going forward? Also, what is the MTM hit on the exposure?

The loan book is mainly related to India and we lend to Indian companies for their global operations. The UK operations have zero NPAs on this book. Two, for non-Indian companies, we have sold the credit default swap and credit-linked notes completely without taking a further loss. Three, we have some investment in some of the banks. There are some mark-to-market problems, but they have been fully taken into account.  Given the present conditions, we will be very cautious and the strategy is to lend only to Indian companies. For the investment part, the repayments are continuing to come and we will hold on to them. But we are not making fresh investment.

Your Casa (current account and savings account) base has improved to 30 per cent. Are you targeting to raise it to 35 per cent by the end of the financial year?

We are working towards improving it and it is a big focus for us. But I will not be able to talk about a specific number since it will be a forward-looking statement. We have increased it by Rs 9,000 crore (Rs 90 billion) this year and we hope to add more.

You spoke about double-digit retail lending growth at the start of the year, then scaled it down to 5 per cent. With retail lending slowing down, are you scaling down the target further?

It has moderated during the year due to an increase in interest rates and for the industry the growth rate is lower. We talked of around 10 per cent growth and we are not seeing a further slowdown.

What about corporate lending? Are people delaying projects, for which they had received sanctions earlier? Also, are NPAs on the rise?

The mood is much more cautious and people are not jumping in till finances are tied up. We have not seen any NPAs.

What about retail NPAs?

We are not seeing further deterioration. In fact, our specific provisions are Rs 10 crore (Rs 100 million) lower. On gross NPAs, we have seen a lower addition than that in the previous quarter. So, our efforts to tighten (lending), is working.

What about telemarketing calls? We understand you have stopped that as a part of a cost-cutting initiative.

We are putting more reliance on our branches than on telemarketing calls and direct selling agents. We will increasingly rely on our branch network and cut our reliance on telemarketing calls. There are many cost-control initiatives we have taken, like rationalising of advertisements, better cost management and a host of other things. We are improving on increasing our productivity levels.

What about hiring plans? Are you going slow there?