Karur Vysya Bank (KVB) has raised its credit growth guidance for the current fiscal to 18-20%, from its earlier projection of 17-18%, as it expects strong demand across lending segments. The lender targets to maintain its net interest margin (NIM) above 4%, despite possible pricing pressure as banks look to deploy funds raised through the special foreign currency deposit window. “We have revised our credit growth estimate to 18-20% this year because there is traction on the ground,” Managing Director and Chief Executive Officer Ramesh Babu B said during a post-earnings media interaction on Friday. The bank has front-loaded loan growth in the first two quarters to avoid competition and aggressive pricing towards the end of the financial year. “We do not want to compete in that cluttered market,” Babu said. He said the bank remains confident of maintaining NIM above 4%, compared with 4.34% reported in the September quarter. However, competition could intensify over the next one or two quarters as banks deploy funds mobilised through the FCNR(B) window. “Naturally, they will be anxious to deploy the money. We feel there can be a pricing pressure for the next one or two quarters,” he said. The repo rate hike is expected to benefit the lender, as around 57% of its loan portfolio is linked to external benchmark lending rates. The bank expects repricing to provide a benefit of around four basis points to lending yields in the coming quarter. On the liability side, Babu said the banking industry continues to face challenges in mobilising low-cost current and savings account (CASA) deposits. However, KVB would not slow down term deposit mobilisation merely to protect its CASA ratio. KVB mobilised around Rs 685 crore through the FCNR(B) window at an effective cost of around 7%, compared with the 7.3-7.4% blended cost of comparable domestic term deposits. The funds have largely been used to repay high-cost deposits, with the remainder deployed towards lending. The bank is also exploring foreign currency borrowings and could conclude a transaction within the next month, subject to favourable pricing. It does not currently plan to raise funds through domestic bonds. On Friday, shares of Karur Vysya Bank closed 2.4% higher at Rs 354.05 on the NSE.