B D Narang, chairman and managing director of Oriental Bank of Commerce, has been chosen for this year's Business Standard Banker of the Year award.

The Best Bank of the Year award goes to the Bangalore-based Vijaya Bank. The relatively small bank is ahead of its competitors in all financial parameters.

Narang was selected on the basis of OBC's track record and a poll of senior Business Standard editors.

Narang, who took over as the chief in 2000, has done well for the bank. While the bank's cost of funds has gone down to under 5 per cent now versus 9 per cent in 2000, the NPA coverage is 107 per cent (23 per cent), the net interest margin is 4 per cent (under 3 per cent), the return on assets is 1.7 per cent (0.9 per cent) and the cost to income ratio has dropped to 29 per cent from 40 per cent in 2000.

Narang, who says he has completed his immediate task of meeting Global Trust Bank's (GTB's) 8.34 lakh retail customers, has revised his growth target for the financial year.

Before the merger proposal, OBC had aimed at 25 per cent growth in 2004-2005. That target has been raised to 30 per cent to touch Rs 80,000 crore (Rs 800 billion).

Though he is retiring in April next year, Narang says he wants to pave the way for a Rs 100,000 crore (Rs 1,000 billion) balance sheet by the end of 2005-06, with a head count of 14,000.

Narang admits that the merger of GTB with OBC will have an impact on the bank's balance sheet, though temporarily. In the long run, he sees a profit potential of Rs 150-200 crore (Rs 1.5-2 billion) in GTB's operations.

Vijaya Bank tops in three out of the five criteria used for the Business Standard bank survey. It has topped in profitability, is the third in productivity, the fifth in growth, 14th in safety and 20th in efficiency.

What is striking, however, is the vast improvement in the bank's working, as a result of which it vaulted 11 places from its number 12 position in 2002-2003 to the number one slot in 2003-2004.

Its chairman and managing director MS Kapur is aggressively pushing retail loans to grow the bank. He intends to grow the retail book to 50 per cent of the bank's total assets.

Kapur says Vijaya's 38.5 per cent credit growth last year was the highest among all public sector banks. The growth rate has been maintained during the first quarter of this financial year.